,,ii ,calendar ,no4 #cee #aaith ,,congress #b;d ,session ,s4 #djfd ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,march #aa1 #bjbf,mr4 ,boozman 7for himself1 ,mr4 ,sullivan1 and ,mr4 ,tuberville7 introduced the following bill2 which was read the first time ,march #ab1 #bjbf,read the second time and placed on the calendar ,a ,,bill ,to provide for a system of regulation of the offer and sale of digital commodities by the ,commodity ,futures ,trading ,commission1 and for other purposes4 #a4 ,short title2 table of contents 7a7 ,short title ,this ,act may be cited as the ,digital ,commodity ,intermediaries ,act4 7b7 ,table of contents ,the table of contents for this ,act is as follows3 ,sec4 #a4 ,short title2 table of contents4,,title ,i--,definitions2 rulemaking,sec4 #aja4 ,definitions under the ,commodity ,exchange ,act4,sec4 #ajb4 ,definitions under this ,act4,sec4 #ajc4 ,rulemakings4,sec4 #ajd4 ,expeditied registration for digital commodity exchanges1 brokers1 and dealers2 provisional status4,sec4 #aje4 ,commodity ,exchange ,act savings provisions4,sec4 #ajf4 ,administrative requirements4,sec4 #ajg4 ,international cooperation4,sec4 #ajh4 ,implementation4,sec4 #aji4 ,effective date4,sec4 #aaj4 ,sense of ,congress4,,title ,,ii--,registration for digital commodity intermediaries at the ,commodity ,futures ,trading ,commission,sec4 #bja4 ,commission jurisdiction over digital commodity transactions4,sec4 #bjb4 ,requiring ,futures ,commission merchants to use qualified digital asset custodians4,sec4 #bjc4 ,trading certification and approval for digital commodities4,sec4 #bjd4 ,registration of digital commodity exchanges4,sec4 #bje4 ,registration and regulation of digital commodity brokers and dealers4,sec4 #bjf4 ,registration of associated persons4,sec4 #bjg4 ,software developer protections4,sec4 #bjh4 ,portfolio margining4,sec4 #bji4 ,clarification on customer property4,sec4 #baj4 ,resources for implementation4,sec4 #baa4 ,digital commodity retail advocate4,sec4 #bab4 ,report4 ,i ,definitions2 rulemaking #aja4 ,definitions under the ,commodity ,exchange ,act 7a7 ,in general ,section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a7 is amended-- 7#a7 by redesignating paragraphs 7#c71 7#d71 7#e7 through 7#ad71 7#ae71 7#af7 through 7#cd71 7#ce7 through 7#ci71 and 7#dj7 through 7#ea7 as paragraphs 7#e71 7#f71 7#aa7 through 7#bj71 7#bd71 7#ca7 through 7#di71 7#ea7 through 7#ee71 and 7#eg7 through 7#fh71 respectively2 7#b7 by inserting after paragraph 7#b7 the following3 7#c7 ,associated person of a digital commodity broker 7,a7 ,in general ,except as provided in subparagraph 7,b71 the term associated person of a digital commodity broker means a person who is associated with a digital commodity broker as a partner1 officer1 employee1 or agent 7or any person occupying a similar status or performing similar functions7 in any capacity that involves-- 7i7 the solicitation or acceptance of an order for the purchase or sale of a digital commodity2 or 7ii7 the supervision of any person engaged in the solicitation or acceptance of an order for the purchase or sale of a digital commodity4 7,b7 ,exclusion ,the term associated person of a digital commodity broker does not include any person associated with a digital commodity broker the functions of which are solely clerical or ministerial4 7#d7 ,associated person of a digital commodity dealer 7,a7 ,in general ,except as provided in subparagraph 7,b71 the term associated person of a digital commodity dealer means a person who is associated with a digital commodity dealer as a partner1 officer1 employee1 or agent 7or any person occupying a similar status or performing similar functions7 in any capacity that involves-- 7i7 the solicitation or acceptance of a contract for the purchase or sale of a digital commodity2 or 7ii7 the supervision of any person engaged in the solicitation or acceptance of a contract for the purchase or sale of a digital commodity4 7,b7 ,exclusion ,the term associated person of a digital commodity dealer does not include any person associated with a digital commodity dealer the functions of which are solely clerical or ministerial4 2 7#c7 by inserting after paragraph 7#f7 7as so redesignated7 the following3 7#g7 ,blockchain ,the term blockchain means technology-- 7,a7 through which data is shared across a network that creates a public blockchain of verified transactions or information among network participants2 and 7,b7 in which cryptography is used to link the data described in subparagraph 7,a7-- 7i7 to maintain the integrity of the blockchain described in that subparagraph2 and 7ii7 to execute other functions4 7#h7 ,blockchain application ,the term blockchain application means any executable software that is deployed to and maintained on a blockchain and composed of a blockchain protocol1 including a smart contract or any network of smart contracts1 or other similar technology4 7#i7 ,blockchain protocol ,the term blockchain protocol means publicly available source code of a blockchain or blockchain application that is executed by the network participants of a blockchain to facilitate its functioning1 or other similar technology4 7#aj7 ,blockchain system ,the term blockchain system means any blockchain1 blockchain application1 or network of blockchain applications1 together with its blockchain protocol4 2 7#d7 by inserting after paragraph 7#bj7 7as so redesignated7 the following3 7#ba7 ,decentralized finance messaging system 7,a7 ,in general ,the term decentralized finance messaging system means a software application that provides a user with the ability to create or submit an instruction1 communication1 or message to a decentralized finance trading protocol4 7,b7 ,additional requirements ,the term decentralized finance messaging system does not include any system that provides any person other than the user with-- 7i7 control over the funds of the user2 or 7ii7 the authority to execute any of the transactions of the user4 7#bb7 ,decentralized finance trading protocol 7,a7 ,in general ,the term decentralized finance trading protocol means a blockchain system through which multiple participants can execute a financial transaction-- 7i7 in accordance with an automated rule or algorithm that is predetermined and nondiscretionary2 and 7ii7 without reliance on a person other than the user to maintain custody or control of any digital assets subject to the financial transaction4 7,b7 ,exclusions 7i7 ,in general ,the term decentralized finance trading protocol does not include a blockchain system if-- 7,i7 a person or group of persons under common control or acting pursuant to an agreement to act in concert has the authority1 directly or indirectly1 through any contract1 arrangement1 understanding1 relationship1 or otherwise1 to control or materially alter the functionality1 operation1 or rules of consensus or agreement of the blockchain system2 7,,ii7 the blockchain system does not operate1 execute1 and enforce its operations and transactions based solely on pre-established1 transparent rules encoded directly within the source code of the blockchain system2 or 7,,iii7 a person or group of persons under common control has the unilateral authority1 via operation of the blockchain system1 to restrict1 censor1 or prohibit the use of the blockchain system1 including any applicable system-based user activity4 7ii7 ,special rule ,for purposes of clause 7i71 a decentralized governance system shall not be considered to be a person or a group of persons under common control or acting pursuant to an agreement to act in concert4 7#bc7 ,decentralized governance system 7,a7 ,in general ,the term decentralized governance system means1 with respect to a blockchain system1 any transparent1 rules-based system permitting persons to form consensus or reach agreement in the development1 provision1 publication1 maintenance1 or administration of such blockchain system1 in which participation is not limited to1 or under the effective control of1 any person or group of persons under common control 7within the meaning of section #ajd7;b7 of the ,digital ,asset ,market ,clarity ,act of #bjbf74 7,b7 ,relationship of persons to decentralized governance systems ,with respect to a decentralized governance system1 the decentralized governance system and any persons participating in the decentralized governance system shall be treated as separate persons unless such persons are under common control or acting pursuant to an agreement to act in concert4 7,c7 ,legal entities for decentralized governance systems 7i7 ,in general ,the term decentralized governance system shall include a legal entity1 including a decentralized unincorporated nonprofit association or other entity created pursuant to ,state law1 used to implement the rules-based system described in subparagraph 7,a71 provided that the legal entity does not operate pursuant to centralized management4 7ii7 ,effect of certain delegations ,for the purposes of this subparagraph1 the delegation of ministerial or administrative authority at the direction of the participants in a decentralized governance system shall not be construed to be centralized management4 2 7#e7 by inserting after paragraph 7#bd7 7as so redesignated7 the following3 7#be7 ,digital asset ,the term digital asset means any digital representation of value which is recorded on a cryptographically secured blockchain4 7#bf7 ,digital asset custodian ,the term digital asset custodian means a person who1 as a regular business1 holds1 maintains1 or safeguards digital assets for others4 7#bg7 ,digital commodity 7,a7 ,in general ,the term digital commodity means any fungible digital asset that can be exclusively possessed and transferred1 person to person1 without necessary reliance on an intermediary1 and is recorded on a blockchain4 7,b7 ,network tokens ,the term digital commodity includes a network token 7as defined in section #d;,b7a7 of the ,securities ,act of #aicc7 unless the network token is excluded from the definition under clauses 7iii7 through 7vii7 of subparagraph 7,d74 7,c7 ,meme coins 7i7 ,in general ,the term digital commodity includes a meme coin unless the meme coin is excluded from the definition under subparagraph 7,d74 7ii7 ,definition ,for the purposes of this paragraph1 the term meme coin means a digital asset inspired by an internet meme1 character1 current event1 or trend for which the promoter seeks to attract an enthusiastic online community to purchase and engage in trading of the digital asset primarily for speculative purposes4 7iii7 ,exclusions ,the ,commission1 by rule or regulation1 may exclude from the term meme coin any digital asset or class of digital assets if the ,commission determines that the rule or regulation will effectuate the purposes of this ,act4 7,d7 ,exclusions ,the term digital commodity does not include any of the following3 7i7 ,security ,any security4 7ii7 ,security derivative ,a digital asset that1 based on its terms and other characteristics1 is1 represents1 or is functionally equivalent to an agreement1 contract1 or transaction that is-- 7,i7 a security future 7as defined in section #b7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a7772 7,,ii7 a security-based swap2 or 7,,iii7 a put1 call1 straddle1 option1 or privilege on any security1 certificate of deposit1 or group or index of securities 7including any interest therein or based on the value thereof7 7within the meaning of section #b7;a77#a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a77#a7774 7iii7 ,permitted payment stablecoin ,a payment stablecoin 7as defined in section #b of the ,,genius ,act 7,public ,law #aai-bg2 #aci ,stat4 #dai77 that is issued by a permitted payment stablecoin issuer 7as defined in that section74 7iv7 ,banking deposit 7,i7 ,a deposit 7as defined in section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac771 regardless of the technology used to record the deposit4 7,,ii7 ,an account 7as defined in section #aja of the ,federal ,credit ,union ,act 7#ab ,u4,s4,c4 #ageb771 regardless of the technology used to record the account4 7v7 ,commodity ,a digital asset that references1 represents an interest in1 or is functionally equivalent to-- 7,i7 an agricultural commodity2 7,,ii7 an excluded commodity1 other than a security2 or 7,,iii7 an exempt commodity1 other than the digital commodity itself1 as shall be further defined by the ,commission4 7vi7 ,commodity derivative ,a digital asset that1 based on its terms and other characteristics1 is1 represents1 or is functionally equivalent to an agreement1 contract1 or transaction that is-- 7,i7 a contract of sale of a commodity for future delivery or an option thereon2 7,,ii7 a security futures product2 7,,iii7 a swap2 7,,iv7 an agreement1 contract1 or transaction described in subparagraph 7,c77i7 or 7,d77i7 of section #b7;c77#b72 7,v7 a commodity option authorized under section #d;c2 or 7,,vi7 a leverage transaction authorized under section #ai4 7vii7 ,pooled investment vehicle 7,i7 ,in general ,a digital asset not described in clause 7i7 that1 based on its terms and other characteristics1 is1 represents1 or is functionally equivalent to an interest in-- 7aa7 a commodity pool2 or 7bb7 a pooled investment vehicle4 7,,ii7 ,pooled investment vehicle defined ,in this clause1 the term pooled investment vehicle means-- 7aa7 any investment company 7as defined in section #c7;a7 of the ,investment ,company ,act of #aidj 7#ae ,u4,s4,c4 #hj;a-#c7;a7772 7bb7 any company 7as defined in section #b of such ,act 7#ae ,u4,s4,c4 #hj;a-#b77 that would be an investment company under section #c7;a7 of such ,act 7#ae ,u4,s4,c4 #hj;a-#c7;a771 but for the exclusions provided from that definition by section #c7;c7 of such ,act 7#ae ,u4,s4,c4 #hj;a-#c7;c771 if for purposes of this subclause the company were assumed to be an issuer 7as defined in section #b of such ,act 7#ae ,u4,s4,c4 #hj;a-#b772 or 7cc7 any entity or person that is not an investment company but holds or will hold assets other than securities4 7viii7 ,good1 collectible1 and other noncommodity digital asset 7,i7 ,in general ,a digital asset that has value1 utility1 or significance beyond its mere existence as a digital asset1 including the digital equivalent of a tangible or intangible good or a nonfungible token 7as defined in section #fjb7;a7 of the ,digital ,asset ,market ,clarity ,act of #bjbf71 such as-- 7aa7 a work of art1 a musical composition1 a literary work1 or other intellectual property2 7bb7 collectibles1 merchandise1 virtual land1 and in-game or in-application assets2 7cc7 affinity1 rewards1 or loyalty points1 including airline miles or credit card points2 or 7dd7 rights1 licenses1 and tickets4 7,,ii7 ,exception ,the ,commission may determine1 by rule or regulation or order1 that a good1 collectible1 or other noncommodity digital asset or class of goods1 collectibles1 or other noncommodity digital assets is traded in such a manner or form that the asset or class of assets should be considered a digital commodity1 such as a mass-minted series of items with substantially similar or nearly identical traits that are marketed or sold interchangeably and are primarily speculative in nature4 7#bh7 ,digital commodity broker 7,a7 ,in general ,the term digital commodity broker means any person who-- 7i7 as a regular business1 in a digital commodity cash or spot market-- 7,i7 7aa7 solicits or accepts an order from a person who is not an eligible contract participant for the purchase or sale of a unit of a digital commodity2 and 7bb7 in conjunction with the activity described in item 7aa71 accepts or maintains control over the funds or other property or assets of the person or the execution of the transaction2 7,,ii7 solicits or accepts an order from a person who is not an eligible contract participant on behalf of a digital commodity dealer for the purchase or sale of a unit of a digital commodity2 or 7,,iii7 solicits or accepts an order from a person who is not an eligible contract participant for the purchase or sale of a unit of a digital commodity on or subject to the rules of a registered digital commodity exchange2 or 7ii7 is registered with the ,commission as a digital commodity broker4 7,b7 ,exceptions ,the term digital commodity broker does not include a person solely because the person-- 7i7 enters into #a or more digital commodity transactions that are attributable or solely incidental to making1 sending1 receiving1 or facilitating payments1 whether involving a payment service provider or on a peer-to-peer basis2 or 7ii7 is a bank 7as defined in section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a777 engaging in certain banking activities with respect to a digital commodity in the same or a similar manner as a bank is excluded from the definition of a broker under section #c7;a77#d7 of that ,act 7#ae ,u4,s4,c4 #gh;c7a77#d771 as determined by the ,commission4 7,c7 ,further definition ,the ,commission1 by rule or regulation1 may exclude from the term digital commodity broker any person or class of persons if the ,commission determines that the rule or regulation is in the public interest and will effectuate the purposes of this ,act4 7#bi7 ,digital commodity dealer 7,a7 ,in general ,the term digital commodity dealer means any person who-- 7i7 as a regular business1 in a spot or cash digital commodity market1 enters into1 or offers to enter into1 a purchase or sale of a unit of a digital commodity-- 7,i7 with a counterparty that is not an eligible contract participant2 and 7,,ii7 not on or through a registered digital commodity exchange or decentralized finance trading protocol2 or 7ii7 is registered with the ,commission as a digital commodity dealer4 7,b7 ,exception ,the term digital commodity dealer does not include a person solely because the person-- 7i7 enters into #a or more digital commodity transactions that are attributable or solely incidental to making1 sending1 receiving1 or facilitating payments1 whether involving a payment service provider or on a peer-to-peer basis2 or 7ii7 is a bank 7as defined in section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a777 engaging in certain banking activities with respect to a digital commodity in the same or a similar manner as a bank is excluded from the definition of a dealer under section #c7;a77#e7 of that ,act 7#ae ,u4,s4,c4 #gh;c7a77#e771 as determined by the ,commission4 7,c7 ,further definition ,the ,commission1 by rule or regulation1 may exclude from the term digital commodity dealer any person or class of persons if the ,commission determines that the rule or regulation is in the public interest and will effectuate the purposes of this ,act4 7#cj7 ,digital commodity exchange ,the term digital commodity exchange means a trading facility that offers or seeks to offer a cash or spot market in at least #a digital commodity4 2 7#f7 by inserting after paragraph 7#di7 7as so redesignated7 the following3 7#ej7 ,mixed digital asset transaction ,the term mixed digital asset transaction means a transaction in which a digital commodity is traded for a security4 2 7#g7 by inserting after paragraph 7#ee7 7as so redesignated7 the following3 7#ef7 ,qualified digital asset custodian 7,a7 ,in general ,the term qualified digital asset custodian means a digital asset custodian that-- 7i7 holds digital assets on behalf of a person registered under this ,act or a customer of a person registered under this ,act2 and 7ii7 is in compliance with subparagraphs 7,b7 though 7,d74 7,b7 ,supervision requirement ,a digital asset custodian is in compliance with this subparagraph if the digital asset custodian is subject to-- 7i7 supervision and examination for custody and safekeeping of digital assets by an appropriate ,federal banking agency1 the ,national ,credit ,union ,administration1 the ,commission1 or the ,securities and ,exchange ,commission2 or 7ii7 adequate supervision and appropriate regulation for custody and safekeeping of digital assets by-- 7,i7 a ,state bank supervisor 7as defined in section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac772 7,,ii7 a ,state officer1 agency1 or other entity that has primary regulatory authority over nondepository ,state trust companies2 7,,iii7 a ,state credit union supervisor 7as defined in section #fjjc of the ,anti-,money ,laundering ,act of #bjbj 7#ca ,u4,s4,c4 #ecaa note2 division ,f of ,public ,law #aaf-bhc772 or 7,,iv7 an appropriate foreign governmental authority in the home country of the digital asset custodian4 7,c7 ,other requirements ,a digital asset custodian is in compliance with this subparagraph if the following requirements are met3 7i7 ,not otherwise prohibited ,the digital asset custodian has not been prohibited by the applicable supervisor described in subparagraph 7,b7 from engaging in an activity with respect to the custody and safekeeping of digital assets4 7ii7 ,information sharing 7,i7 ,in general ,the digital asset custodian shares information with the ,commission on request and complies with such requirements for periodic sharing of information regarding customer accounts that the digital asset custodian holds on behalf of an entity registered with the ,commission as the ,commission determines by rule are reasonably necessary to effectuate any of the provisions1 or to accomplish any of the purposes1 of this ,act4 7,,ii7 ,provision of information ,if the digital asset custodian is subject to regulation and examination by an appropriate ,federal banking agency1 the digital asset custodian may satisfy any information request described in subclause 7,i7 by providing the ,commission with a detailed listing1 in writing1 of the digital assets of a customer in the custody of1 or use by1 the digital asset custodian4 7,d7 ,rulemaking 7i7 ,in general ,the ,commission shall prescribe rules to permit a person registered with the ,commission to be a qualified digital asset custodian4 7ii7 ,content ,in prescribing the rules under clause 7i71 to be a qualified digital asset custodian1 the ,commission shall require a person registered with the ,commission-- 7,i7 to implement requirements consistent with the requirements described in subparagraph 7,e77i72 7,,ii7 to establish sufficient system safeguards2 7,,iii7 to prevent or mitigate conflicts of interest1 as appropriate2 and 7,,iv7 to establish separate governance arrangements for the custodial function of the entity4 7,e7 ,adequate supervision and appropriate regulation 7i7 ,in general ,for purposes of subparagraph 7,b71 the terms adequate supervision and appropriate regulation mean such minimum standards for supervision and regulation as are reasonably necessary to protect the digital assets held by a person registered under this ,act1 including standards relating to the licensing1 examination1 and supervisory processes that require the person to1 at a minimum-- 7,i7 receive a review and evaluation of ownership1 character and fitness1 conflicts of interest1 business model1 financial statements1 funding resources1 and policies and procedures of the digital asset custodian2 7,,ii7 hold capital sufficient to conduct an orderly wind-down and resolution of the digital asset custodian2 7,,iii7 protect customer assets2 7,,iv7 establish and maintain books and records regarding the business of the digital asset custodian2 7,v7 submit financial statements and audited financial statements to the applicable supervisor described in subparagraph 7,b72 7,,vi7 provide disclosures to the applicable supervisor described in subparagraph 7,b7 regarding actions1 proceedings1 and other items as determined by the supervisor2 7,,vii7 maintain and enforce policies and procedures for compliance with applicable ,state and ,federal laws1 including those related to anti-money laundering and cybersecurity2 7,,viii7 establish a business continuity plan to ensure functionality in cases of disruption2 and 7,,ix7 establish policies and procedures to resolve complaints4 7ii7 ,rulemaking with respect to definitions 7,i7 ,in general ,for purposes of this paragraph1 the ,commission shall1 by rule1 further define the terms adequate supervision and appropriate regulation as necessary and appropriate for the protection of customers1 and consistent with the purposes of this ,act4 7,,ii7 ,existing digital asset custodians ,a ,state depository institution or a trust company operating as a digital asset custodian before the effective date of a rulemaking under subclause 7,i7 is deemed subject to adequate supervision and appropriate regulation if-- 7aa7 the ,state depository institution or trust company is expressly permitted by a ,state bank supervisor to engage in the custody and safekeeping of digital assets2 7bb7 the ,state bank supervisor has established licensing1 examination1 and supervisory processes that require the ,state depository institution or trust company to1 at a minimum1 meet the conditions described in subclauses 7,i7 through 7,,ix7 of clause 7i72 and 7cc7 the ,state depository institution or trust company is in good standing with its ,state bank supervisor4 7,,iii7 ,transition period for certain custodians ,in implementing the rulemaking under subclause 7,i71 the ,commission shall provide a transition period of not less than #b years for any ,state depository institution or trust company that is deemed subject to adequate supervision and appropriate regulation under subclause 7,,ii7 on the effective date of the rulemaking4 7,f7 ,authority to temporarily suspend standards ,the ,commission may1 by rule or order1 temporarily suspend1 in whole or in part1 any requirement imposed under1 or any standard referred to in1 this section1 or any requirement to utilize a qualified digital asset custodian1 if the ,commission determines that the suspension would be consistent with the public interest and the purposes of this ,act4 2 and 7#h7 in paragraph 7#eg7 7as so redesignated7-- 7,a7 in subparagraph 7,e71 by striking and at the end2 7,b7 in subparagraph 7,f71 by striking the period at the end and inserting 2 and2 and 7,c7 by adding at the end the following3 7,g7 a digital commodity exchange registered under section #e;i4 4 7b7 ,conforming amendments 7#a7 ,section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a7 is amended-- 7,a7 in paragraph 7#cb77;,a7 7as redesignated by subsection 7a77#a771 in the matter preceding clause 7i71 by striking 7#ah77;,a7 and inserting 7#cc77;,a72 and 7,b7 in paragraph 7#cc77;,a77vii77,,iii77aa7 7as redesignated by subsection 7a77#a771 by striking 7#ag77;,a7 and inserting 7#cb77;,a74 7#b7 ,section #d7;c77#a77;,a77i77,i7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #f7;c77#a77;,a77i77,i77 is amended by striking paragraphs 7#b71 7#c71 7#d71 7#e71 and 7#g71 paragraph 7#ah77;,a77vii77,,iii71 paragraphs 7#bc71 7#bd71 7#ca71 7#cb71 7#ch71 7#ci71 7#da71 7#db71 7#df71 7#dg71 7#dh71 and 7#di7 of section #a;a and inserting paragraphs 7#b71 7#e71 7#f71 7#aa71 7#ac71 7#cc77;,a77vii77,,iii71 7#ch71 7#ci71 7#df71 7#dg71 7#ed71 7#ee71 7#eh71 7#ei71 7#fc71 7#fd71 7#fe71 and 7#ff7 of section #a;a4 7#c7 ,section #dq7a77#a7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #fq7a77#a77 is amended by striking #a;a7#i7 and inserting #a;a7#ae74 7#d7 ,section #ds of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #fs7 is amended-- 7,a7 in subsection 7f77#a77;,d71 by striking #a;a7#dg77;,a77v7 and inserting #a;a7#fd77;,a77v72 and 7,b7 in subsection 7h77#e77;,a77i71 in the matter preceding subclause 7,i71 by striking #a;a7#ah7 of this ,act and inserting #a;a7#cc74 7#e7 ,section #dt7b77#a77;,c7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #ft7b77#a77;,c77 is amended by striking #a;a7#dg77;,a77v771 and inserting #a;a7#fd77;,a77v7714 7#f7 ,section #e of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #g7 is amended-- 7,a7 in subsection 7d77#bc71 by striking #a;a7#dg77;,a77v7 and inserting #a;a7#fd77;,a77v72 and 7,b7 in subsection 7e77#a71 by striking #a;a7#i7 and inserting #a;a7#ae74 7#g7 ,section #e;b7k77#c77;,a7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #g;a-#a7k77#c77;,a77 is amended by striking #a;a7#dg77;,a77v77 and inserting #a;a7#fd77;,a77v774 7#h7 ,section #e;h7f77#aj77;,a77iii7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #g;b-#c7;f77#aj77;,a77iii77 is amended by striking #a;a7#dg77;,a77v7 and inserting #a;a7#fd77;,a77v74 7#i7 ,section #ba7;f77#d77;,c7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #bd;a7f77#d77;,c77 is amended by striking #a;a7#dh7 and inserting #a;a7#fe74 7#aj7 ,section #e7;e7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;e7e77 is amended by striking section #a;a7#ah7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a7#ah77 and inserting section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a74 7#aa7 ,section #c;,c7g77#c77;,a77v7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c-#c7;g77#c77;,a77v77 is amended by striking section #a;a7#aj7 of the ,commodity ,exchange ,act2 and inserting section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a724 7#ab7 ,section #f7;g77#e77;,b77i7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;f7g77#e77;,b77i77 is amended-- 7,a7 in subclause 7,i71 by striking section #a;a7#ah77;,b77ii7 of the ,commodity ,exchange ,act and inserting subparagraph 7,b77ii7 of section #a;a7#cc7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a7#cc772 and 7,b7 in subclause 7,,ii71 by striking such section #a;a7#ah77 and inserting that section74 7#ac7 ,section #ae;,f7h77#e77;,a77i7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho-#aj7;h77#e77;,a77i77 is amended1 in the matter preceding subclause 7,i71 by striking #a;a7#ah7 and inserting #a;a7#cc74 7#ad7 ,section #gab of the ,wall ,street ,transparency and ,accountability ,act of #bjaj 7#ae ,u4,s4,c4 #hcjb7 is amended-- 7,a7 in subsection 7a77#h71 by striking #a;a7#dg77;,d7 each place it appears and inserting #a;a7#fd77;,d72 and 7,b7 in subsection 7d77#a71 by striking #a;a7#dg77;,a77v7 each place it appears and inserting #a;a7#fd77;,a77v74 7#ae7 ,section #geb7;a7 of the ,dodd-,frank ,wall ,street ,reform and ,consumer ,protection ,act 7#ae ,u4,s4,c4 #hcbe7;a77 is amended by striking section #a;a7#ci7 of the ,commodity ,exchange ,act71 and inserting section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a7714 7#af7 ,section #djc of the ,legal ,certainty for ,bank ,products ,act of #bjjj 7#g ,u4,s4,c4 #bg;a7 is amended-- 7,a7 in subsection 7a77#b71 by striking #a;a7#dg77;,a77v7 and inserting #a;a7#fd77;,a77v72 and 7,b7 in each of subsections 7b77#a7 and 7c77#b71 by striking #a;a7#dg7 and inserting #a;a7#fd74 #ajb4 ,definitions under this ,act ,in this ,act1 the terms blockchain1 decentralized finance messaging system1 decentralized finance trading protocol1 decentralized governance system1 digital asset1 digital commodity1 digital commodity broker1 digital commodity dealer1 digital commodity exchange1 and mixed digital asset transaction have the meanings given those terms1 respectively1 in section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a74 #ajc4 ,rulemakings 7a7 ,definitions ,the ,commodity ,futures ,trading ,commission shall issue rules to further define the terms associated person of a digital commodity broker1 associated person of a digital commodity dealer1 blockchain1 blockchain application1 blockchain protocol1 blockchain system1 decentralized finance messaging system1 decentralized finance trading protocol1 decentralized governance system1 and digital commodity7as defined in section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a774 7b7 ,joint rulemaking for exchanges and intermediaries ,the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly issue rules to exempt persons dually registered with the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission from duplicative1 conflicting1 or unduly burdensome provisions of this ,act1 the securities laws 7as defined in section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a7771 and the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq471 and the rules under those ,acts1 to the extent that the exemption would-- 7#a7 foster the development of fair and orderly markets in digital assets2 7#b7 be necessary or appropriate for the protection of customers2 and 7#c7 be consistent with the protection of investors4 7c7 ,joint rulemaking for mixed digital asset transactions ,the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly issue rules applicable to mixed digital asset transactions under this ,act and the amendments made by this ,act1 including by further defining such term4 7d7 ,joint rulemaking1 procedures1 or guidance for delisting ,not later than #ahj days after the date of enactment of this ,act1 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission 7referred to in this subsection as the ,commissions7 shall jointly issue rules1 procedures1 or guidance 7as determined appropriate by the ,commissions7 regarding the process to delist an asset for trading under section #ajd if the ,commissions determine that the listing is inconsistent with the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq471 the securities laws 7as defined in section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a777 7including regulations under those laws71 or this ,act4 7e7 ,joint rules for portfolio margining determinations 7#a7 ,in general ,not later than #cfj days after the date of enactment of this ,act1 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall jointly issue rules with respect to margin1 customer protection1 segregation1 or other requirements as necessary to facilitate portfolio margining of securities 7including related extensions of credit71 security-based swaps1 contracts for future delivery1 options on a contract for future delivery1 swaps1 and digital commodities1 or any subset thereof1 in-- 7,a7 a securities account carried by a registered broker or dealer or a security-based swap account carried by a registered security-based swap dealer2 7,b7 a futures or cleared swap account carried by a registered futures commission merchant 7as defined in section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a772 7,c7 a swap account carried by a swap dealer2 or 7,d7 a digital commodity account carried by a registered digital commodity broker or digital commodity dealer that is also registered in such other capacity as is necessary to also carry the other customer or counterparty positions being held in the account4 7#b7 ,requirements ,with respect to a joint rulemaking described in paragraph 7#a7-- 7,a7 the joint rule shall be in the public interest and provide for the appropriate protection of customers2 7,b7 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall consider the public interest of the joint rule through the solicitation of public comments2 and 7,c7 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission shall consult with other relevant foreign or domestic regulators1 including the ,board of ,governors of the ,federal ,reserve ,system1 the ,federal ,deposit ,insurance ,corporation1 and the ,office of the ,comptroller of the ,currency1 as appropriate4 7f7 ,conflicts of interest rulemaking 7#a7 ,rulemaking ,not later than #ag months after the date of enactment of this ,act1 the ,commodity ,futures ,trading ,commission shall issue rules establishing requirements for the identification1 mitigation1 and resolution of conflicts of interest among and across registered entities 7as defined in section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a77 and persons required to be registered with the ,commodity ,futures ,trading ,commission1 including conflicts of interest related to vertically integrated market structures4 7#b7 ,minimum standards ,the rules issued under paragraph 7#a7 shall1 at a minimum-- 7,a7 establish governance1 personnel1 and financial resource separation among affiliated entities that perform distinct regulated functions2 7,b7 prohibit trading facilities or intermediaries from acting as counterparties to customer transactions or otherwise engaging in self-dealing1 except as provided in section #e;i7b77#b77;,b7 of the ,commodity ,exchange ,act2 7,c7 require appropriate safeguards for custody and use of customer assets to prevent conflicts arising from commingling or misuse2 7,d7 mandate disclosure and management of material conflicts1 including those involving affiliated entities or proprietary trading2 and 7,e7 ensure independent oversight and decision-making in market operations and compliance4 #ajd4 ,expeditied registration for digital commodity exchanges1 brokers1 and dealers2 provisional status 7a7 ,registration 7#a7 ,in general ,unless exempted from registration1 a person shall not act as a digital commodity exchange1 digital commodity broker1 or digital commodity dealer after the end of the #ij-;day period beginning on the date the process described in paragraph 7#b7 is adopted by the ,commodity ,futures ,trading ,commission1 unless1 as the case may be1 the person is registered as a-- 7,a7 digital commodity exchange pursuant to section #e;i of the ,commodity ,exchange ,act2 7,b7 digital commodity broker pursuant to section #du of the ,commodity ,exchange ,act2 or 7,c7 digital commodity dealer pursuant to section #du of the ,commodity ,exchange ,act4 7#b7 ,expedited process ,not later than #ahj days after the date of enactment of this ,act1 the ,commodity ,futures ,trading ,commission shall adopt1 by rule1 regulation1 or order1 a process for expedited registration of persons required to be registered pursuant to paragraph 7#a74 7b7 ,provisional status 7#a7 ,in general ,a person who is registered in accordance with subsection 7a7 shall be in provisional status until-- 7,a7 in the case of a digital commodity broker or digital commodity dealer1 the date that is #bgj days after the final effective date of the rulemakings required under section #du of the ,commodity ,exchange ,act2 or 7,b7 in the case of a digital commodity exchange1 the date that is #bgj days after the final effective date of the rulemakings required under section #e;i of such ,act4 7#b7 ,payment of fees ,a person in provisional status shall pay all fees required of persons registered with the ,commodity ,futures ,trading ,commission under section #h;e of the ,commodity ,exchange ,act4 7c7 ,operations prior to regulations 7#a7 ,requirements ,a person in provisional status pursuant to subsection 7b7 shall be subject to the requirements of this section and the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq47 and any rules or regulations promulgated under this section or that ,act1 as applicable4 7#b7 ,listings 7,a7 ,in general ,except as provided in subparagraph 7,b71 a person in provisional status pursuant to subsection 7b7 may continue to offer1 solicit1 trade1 facilitate1 execute1 clear1 report1 or otherwise deal in any digital asset offered on or through the facilities of the person before the date of registration under this section1 until such time as the rulemaking on definitions required under section #ajc7;a7 is effective4 7,b7 ,delisting ,before the effective date of the rulemaking on definitions under section #ajc7;a71 a person in provisional status pursuant to subsection 7b7 shall cease offering1 soliciting1 trading1 facilitating1 executing1 clearing1 reporting1 or otherwise dealing in any digital asset required to be delisted pursuant to a joint delisting process established under section #ajc7;e74 7#c7 ,exemptive authority ,in order to promote responsible innovation and fair competition1 or protect customers1 the ,commodity ,futures ,trading ,commission may exempt any persons or class of persons in provisional status pursuant to subsection 7b7 from any requirements of this section or the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq47 or any rules or regulations promulgated under this section or that ,act1 as applicable4 7d7 ,customer disclosure before registration 7#a7 ,in general ,beginning #cj days after the date of enactment of this ,act1 any person acting as a digital commodity exchange1 digital commodity broker1 or digital commodity dealer shall disclose to the customers of the person so acting1 in the disclosure documents1 offering documents1 and promotional material of the person so acting1 in a prominent manner1 that the person is not registered with or regulated by the ,commodity ,futures ,trading ,commission4 7#b7 ,exception ,paragraph 7#a7 shall not apply to any person who registers pursuant to subsection 7a74 #aje4 ,commodity ,exchange ,act savings provisions 7a7 ,in general ,nothing in this ,act or any amendment made by this ,act shall affect or apply to1 or be interpreted to affect or apply to-- 7#a7 any agreement1 contract1 or transaction that is subject to the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a et seq47 as-- 7,a7 a contract of sale of a commodity for future delivery or an option on such a contract 7as those terms are defined in section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a772 7,b7 a swap 7as defined in that section72 7,c7 a security futures product 7as defined in that section72 7,d7 an option authorized under section #d;c of that ,act 7#g ,u4,s4,c4 #f;c72 7,e7 an agreement1 contract1 or transaction described in section #b7;c77#b77;,c77i7 of that ,act 7#g ,u4,s4,c4 #b7;c77#b77;,c77i772 or 7,f7 a leverage transaction authorized under section #ai of that ,act 7#g ,u4,s4,c4 #bc72 or 7#b7 the activities of any person with respect to any agreement1 contract1 or transaction described in paragraph 7#a74 7b7 ,prohibitions on spot digital commodity entities ,nothing in this ,act authorizes1 or shall be interpreted to authorize1 a digital commodity exchange1 digital commodity broker1 or digital commodity dealer to engage in any activities involving any transaction1 contract1 or agreement described in subsection 7a77#a71 solely by virtue of being registered as a digital commodity exchange1 digital commodity broker1 or digital commodity dealer4 7c7 ,effect ,an agreement1 contract1 or transaction described in subsection 7a77#a7 shall not be regulated as a digital commodity agreement1 contract1 or transaction solely because it is issued1 recorded1 represented1 or transferred on a blockchain or other similar technology4 #ajf4 ,administrative requirements ,section #d;c7a7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #f;c7a77 is amended-- 7#a7 in paragraph 7#c7-- 7,a7 in subparagraph 7,b71 by striking or at the end2 7,b7 in subparagraph 7,c71 by striking the period and inserting 2 or2 and 7,c7 by adding at the end the following3 7,d7 a contract of sale of a digital commodity4 2 and 7#b7 in paragraph 7#d7-- 7,a7 in subparagraph 7,a7-- 7i7 in clause 7ii71 by striking or at the end2 7ii7 in clause 7iii71 by striking the period and inserting 2 or2 and 7iii7 by adding at the end the following3 7iv7 a contract of sale of a digital commodity4 2 7,b7 in subparagraph 7,b7-- 7i7 in clause 7ii71 by striking or at the end2 7ii7 in clause 7iii71 by striking the period and inserting 2 or2 and 7iii7 by adding at the end the following3 7iv7 a contract of sale of a digital commodity4 2 and 7,c7 in subparagraph 7,c7-- 7i7 by redesignating clauses 7i7 through 7iii7 as subclauses 7,i7 through 7,,iii71 respectively1 and indenting appropriately2 7ii7 in the matter preceding subclause 7,i7 7as so redesignated71 by striking ,it shall and inserting the following3 7i7 ,in general ,it shall 2 7iii7 in clause 7i7 7as so designated7-- 7,i7 in subclause 7,,ii71 by striking or at the end2 and 7,,ii7 in subclause 7,,iii71 by striking a swap1 provided1 however1 that nothing and inserting the following3 8a swap2 or 7,,iv7 a contract of sale of a digital commodity4 7ii7 ,effect ,nothing 2 and 7iv7 in clause 7ii7 7as so designated71 by striking clauses 7i71 7ii71 or 7iii7 and inserting any of subclauses 7,i7 through 7,,iv7 of clause 7i74 #ajg4 ,international cooperation ,in order to promote greater consistency in effective and consistent global regulation of digital commodities1 the ,commodity ,futures ,trading ,commission1 as appropriate-- 7#a7 shall consult and coordinate with foreign regulatory authorities on the application of consistent international standards with respect to the regulation of digital commodities2 and 7#b7 may enter into such information-sharing arrangements as are determined necessary or appropriate for the protection of investors1 customers1 and users of digital commodities4 #ajh4 ,implementation 7a7 ,global rulemaking timeframe ,unless otherwise provided in this ,act or an amendment made by this ,act1 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission1 or both1 shall individually1 and jointly where required1 promulgate rules and regulations required of each ,commission under this ,act or an amendment made by this ,act not later than #ag months after the date of enactment of this ,act4 7b7 ,rules and registration before final effective dates 7#a7 ,in general ,in order to prepare for the implementation of this ,act and the amendments made by this ,act1 the ,commodity ,futures ,trading ,commission and the ,securities and ,exchange ,commission may1 before any effective date provided in this ,act or an amendment made by this ,act-- 7,a7 promulgate rules1 regulations1 or orders permitted or required by this ,act or the amendments made by this ,act2 7,b7 conduct studies and prepare reports and recommendations required by this ,act or the amendments made by this ,act2 7,c7 register persons under this ,act or the amendments made by this ,act2 and 7,d7 exempt persons1 agreements1 contracts1 or transactions from provisions of this ,act or the amendments made by this ,act1 in accordance with this ,act or those amendments4 7#b7 ,limitation on effectiveness ,an action by the ,commodity ,futures ,trading ,commission or the ,securities and ,exchange ,commission under paragraph 7#a7 shall not become effective before the effective date otherwise applicable to the action under this ,act or the amendments made by this ,act4 7c7 ,sense of ,congress ,it is the sense of ,congress that prior to implementation of this ,act the ,commodity ,futures ,trading ,commission-- 7#a7 be fully constituted as described in section #b7;a77#b7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #b7;a77#b77 to carry out all existing responsibilities and those directed by this ,act1 with not fewer than #b of the ,commissioners nominated1 prior to such appointments1 following consultation and coordination with the ranking minority member of the ,committee on ,agriculture1 ,nutrition1 and ,forestry of the ,senate2 and 7#b7 be appropriately staffed to ensure sufficient regulatory capacity1 expertise1 and enforcement readiness necessary to implement this ,act and the amendments made by this ,act4 #aji4 ,effective date 7a7 ,in general ,except as provided in subsection 7b7 and as otherwise provided in this ,act or an amendment made by this ,act1 this ,act and the amendments made by this ,act shall take effect on the date that is #ag months after the date of enactment of this ,act4 7b7 ,rulemaking provisions ,to the extent that a provision of this ,act or an amendment made by this ,act requires a rulemaking1 the provision shall take effect on the later of-- 7#a7 #ag months after the date of enactment of this ,act2 and 7#b7 #abj days after the publication in the ,federal ,register of the final rule implementing the provision4 #aaj4 ,sense of ,congress ,it is the sense of ,congress that nothing in this ,act or any amendment made by this ,act should be interpreted to authorize any entity to regulate any commodity1 other than a digital commodity1 on any spot market4 ,,ii ,registration for digital commodity intermediaries at the ,commodity ,futures ,trading ,commission #bja4 ,commission jurisdiction over digital commodity transactions 7a7 ,savings clause ,section #b7;a77#a7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #b7;a77#a77 is amended by adding at the end the following3 7,j7 7i7 ,except as expressly provided in this ,act1 nothing in the ,digital ,commodity ,intermediaries ,act or any amendment made by that ,act shall affect or apply to1 or be interpreted to affect or apply to-- 7,i7 any agreement1 contract1 or transaction that is subject to this ,act as-- 7aa7 a contract of sale of a commodity for future delivery or an option on such a contract2 7bb7 a swap2 7cc7 a security futures product2 7dd7 an option authorized under section #d;c2 7ee7 an agreement1 contract1 or transaction described in subparagraph 7,c77i7 or 7,d77i7 of subsection 7c77#b72 or 7ff7 a leverage transaction authorized under section #ai2 or 7,,ii7 the activities of any person with respect to any such agreement1 contract1 or transaction4 7ii7 ,an agreement1 contract1 or transaction described in clause 7i77,i7 shall not be regulated as a digital commodity agreement1 contract1 or transaction solely because it is issued1 recorded1 represented1 or transferred on a blockchain or other similar technology4 4 7b7 ,limitation on authority over permitted payment stablecoins ,section #b7;c77#a7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #b7;c77#a77 is amended-- 7#a7 in the matter preceding subparagraph 7,a71 by striking section1 #e;b1 or and inserting section #e;b or2 7#b7 in subparagraph 7,f71 by striking or at the end2 7#c7 in subparagraph 7,g71 by striking the period and inserting 2 or2 and 7#d7 by adding at the end the following3 7,h7 a payment stablecoin 7as defined in section #b of the ,,genius ,act 7,public ,law #aai-bg2 #aci ,stat4 #dai77 that is issued by a permitted payment stablecoin issuer 7as defined in that section7 7referred to in this subsection as a permitted payment stablecoin74 4 7c7 ,commission jurisdiction over digital commodity transactions ,section #b7;c77#b7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #b7;c77#b77 is amended-- 7#a7 in subparagraph 7,d7-- 7,a7 in clause 7ii7-- 7i7 in subclause 7,i71 by inserting after paragraph 7#a7 the following3 7other than an agreement1 contract1 or transaction in a permitted payment stablecoin72 7ii7 by striking subclause 7,,iv72 and 7iii7 by redesignating subclause 7,v7 as subclause 7,,iv72 7,b7 by redesignating clause 7iv7 as clause 7v72 7,c7 by inserting after clause 7iii7 the following3 7iv7 ,digital commodities2 permitted payment stablecoins ,this subparagraph shall not apply to a contract of sale of a digital commodity or a permitted payment stablecoin that results in actual delivery within #b days or such other period as the ,commission may determine by rule or regulation based upon the typical commercial practice in cash or spot markets for the digital commodity or permitted payment stablecoin involved4 2 and 7,d7 by inserting after clause 7v7 7as so redesignated7 the following3 7vi7 ,retail commodity transaction rulemaking ,the ,commission shall1 by rule or regulation1 establish appropriate conditions1 requirements1 or limitations with respect to the extension of leverage1 margin1 or financing in connection with any cash or spot digital commodity agreement1 contract1 or transaction subject to this subparagraph4 7vii7 ,further rulemaking authority ,in order to promote responsible innovation and fair competition1 or protect customers1 the ,commission may by rule or regulation exempt1 either unconditionally or on stated terms or conditions or for stated periods1 and either retroactively or prospectively1 or both1 a digital commodity exchange or a digital commodity broker from the requirements of this subparagraph1 if the ,commission determines that the exemption would be consistent with the public interest and the purposes of this ,act4 2 and 7#b7 by adding at the end the following3 7,f7 ,commission jurisdiction with respect to digital commodity transactions 7i7 ,in general ,subject to sections #f;d and #ab7;e71 the ,commission shall have exclusive jurisdiction with respect to any account1 agreement1 contract1 or transaction involving a contract of sale of a digital commodity in interstate commerce1 including in a digital commodity cash or spot market1 that is offered1 solicited1 traded1 facilitated1 executed1 cleared1 reported1 or otherwise dealt in-- 7,i7 on or subject to the rules of a registered entity or an entity that is required to be registered as a registered entity2 or 7,,ii7 by any other entity registered1 or required to be registered1 with the ,commission4 7ii7 ,limitations ,clause 7i7 shall not apply with respect to-- 7,i7 custodial or depository activities for a digital commodity of an entity regulated by-- 7aa7 an appropriate ,federal banking agency2 or 7bb7 a ,state bank supervisor 7as defined in section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac772 7,,ii7 an offer or sale of an investment contract involving a digital commodity or a securities offer or sale involving a digital commodity2 or 7,,iii7 a mixed digital asset transaction4 7,g7 ,agreements1 contracts1 and transactions in stablecoins 7i7 ,treatment of permitted payment stablecoins on ,commission-registered entities ,subject to clauses 7ii7 and 7iii71 the ,commission shall have jurisdiction over a cash or spot agreement1 contract1 or transaction in a permitted payment stablecoin that is offered1 offered to enter into1 entered into1 executed1 solicited1 or accepted1 or for which the execution of is confirmed-- 7,i7 on or subject to the rules of a registered entity2 or 7,,ii7 by any other entity registered with the ,commission4 7ii7 ,permitted payment stablecoin transaction rules ,this ,act shall apply to a transaction described in clause 7i7 only for the purpose of regulating the offer1 execution1 solicitation1 or acceptance of a cash or spot permitted payment stablecoin transaction on a registered entity or by any other entity registered with the ,commission1 as if the permitted payment stablecoin were a digital commodity4 7iii7 ,no authority over permitted payment stablecoins ,notwithstanding clauses 7i7 and 7ii71 the ,commission shall not make a rule or regulation1 impose a requirement or obligation on a registered entity or other entity registered with the ,commission1 or impose a requirement or obligation on a permitted payment stablecoin issuer regarding the operation of a permitted payment stablecoin issuer or a permitted payment stablecoin4 4 7d7 ,network tokens and ancillary assets ,section #b of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #b7 is amended by adding at the end the following3 7k7 ,treatment of secondary market network tokens and certified ancillary assets ,the secondary market offer or sale of a network token 7as defined in section #d;,b7a7 of the ,securities ,act of #aicc7 other than the offer or sale of an investment contract pursuant to which an ancillary asset is offered or sold by an ancillary asset originator1 or an underwriter with respect to an investment contract pursuant to which such ancillary asset was originally sold1 shall be considered an offer or sale of a digital commodity4 4 7e7 ,conforming amendments 7#a7 ,paragraph 7#ae7 of section #a;a of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a;a7 7as amended by section #ag7;f7 of the ,,genius ,act 7,public ,law #aai-bg2 #aci ,stat4 #dfc7 and as redesignated by section #aja7;a77#a77 is amended by striking the second sentence4 7#b7 ,section #b7;a77#a77;,a7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #b7;a77#a77;,a77 is amended1 in the first sentence1 by striking section #ai of this ,act and inserting subparagraph 7,f7 or 7,g7 of subsection 7c77#b7 or section #ai4 7#c7 ,section #d7;c77#a7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c #f7;c77#a77 is amended by adding after subparagraph 7,b7 the following3 ,for purposes of this paragraph1 an agreement1 contract1 or transaction that is subject to the jurisdiction of the ,commission under any of the amendments made to this ,act by the ,digital ,commodity ,intermediaries ,act shall be subject to subsection 7a74 4 #bjb4 ,requiring ,futures ,commission merchants to use qualified digital asset custodians ,section #d;d of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #f;d7 is amended-- 7#a7 in subsection 7a77#b7-- 7,a7 in the first proviso1 by striking any bank or trust company and inserting any bank1 trust company1 or qualified digital asset custodian1 as applicable12 and 7,b7 by inserting 3 ,provided further1 ,that any such property that is a digital asset shall be held in a qualified digital asset custodian before the period at the end2 and 7#b7 in subsection 7f77#c77;,a77i71 by striking any bank or trust company or with a and inserting any bank1 trust company1 qualified digital asset custodian1 or4 #bjc4 ,trading certification and approval for digital commodities ,section #e;c of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #g;a-#b7 is amended-- 7#a7 in subsection 7a77#a71 by striking #e7;d7 and #e;b7c77#b7 and inserting #e7;d71 #e;b7c77#b71 and #e;i7c72 7#b7 in subsection 7b7-- 7,a7 in each of paragraphs 7#a7 and 7#b71 by inserting digital commodity exchange1 before derivatives2 and 7,b7 in paragraph 7#c71 by inserting digital commodity exchange1 before derivatives each place it appears2 7#c7 in subsection 7c7-- 7,a7 in paragraph 7#b71 by inserting or participants before 7in2 7,b7 in paragraph 7#d77;,b71 by striking #a;a7#aj7 and inserting #a;a7#af72 and 7,c7 in paragraph 7#e71 by adding at the end the following3 7,d7 ,special rules for digital commodity contracts ,in certifying any new rule or rule amendment1 or listing any new contract or instrument1 in connection with a contract of sale of a commodity for future delivery1 option1 swap1 or other agreement1 contract1 or transaction1 that is based on or references a digital commodity1 a registered entity may make or rely on a certification under subsection 7d7 for the digital commodity4 2 and 7#d7 by inserting after subsection 7c7 the following3 7d7 ,certifications for digital commodity trading 7#a7 ,in general ,notwithstanding subsection 7c71 for the purposes of listing or offering a digital commodity for trading in a digital commodity cash or spot market1 an eligible entity shall submit a written certification to the ,commission that the digital commodity meets the requirements of this ,act 7including the regulations prescribed under this ,act74 7#b7 ,contents of the certification ,in making a written certification under this subsection1 an eligible entity shall furnish to the ,commission an analysis of how the digital commodity meets the requirements of section #e;i7c77#c74 7#c7 ,modifications 7,a7 ,in general ,an eligible entity shall modify a certification made under paragraph 7#a7 to account for material changes in any information provided in connection with the requirements of section #e;i7c77#c74 7,b7 ,recertification ,modifications required by this subsection shall be subject to the same disapproval and review process as a new certification under paragraphs 7#d7 and 7#e74 7#d7 ,disapproval 7,a7 ,in general ,the written certification described in paragraph 7#a7 shall become effective unless the ,commission finds that the listing of the digital commodity is inconsistent with the requirements of this ,act or the rules and regulations prescribed under this ,act4 7,b7 ,analysis required ,the ,commission shall include1 with any findings referred to in subparagraph 7,a71 a detailed analysis of the factors on which the decision was based4 7,c7 ,public findings ,the ,commission shall make public any disapproval decision1 and any related findings and analysis1 made under this paragraph4 7#e7 ,review 7,a7 ,in general ,unless the ,commission makes a disapproval decision under paragraph 7#d71 the written certification described in paragraph 7#a7 shall become effective1 pursuant to the certification by the eligible entity and notice of the certification to the public 7in a manner determined by the ,commission7 on the date that is-- 7i7 #bj business days after the date the ,commission receives the certification 7or such shorter period as determined by the ,commission by rule or regulation71 in the case of a digital commodity that has not been certified under this section or for which a certification is being modified under paragraph 7#c72 or 7ii7 #a business day after the date the ,commission receives the certification 7or such shorter period as determined by the ,commission by rule or regulation7 for any digital commodity that has been certified under this section4 7,b7 ,extensions ,the time for consideration under subparagraph 7,a7 may be extended-- 7i7 once1 for #cj business days1 through written notice to the eligible entity by the ,commission-- 7,i7 that there are novel or complex issues that require additional time to analyze2 7,,ii7 that the explanation by the submitting eligible entity is inadequate2 or 7,,iii7 of a potential inconsistency with this ,act2 and 7ii7 once1 for an additional #cj business days1 through written notice to the eligible entity from the ,commission that includes a description of any issues with the certification1 including any-- 7,i7 novel or complex issues that require additional time to analyze2 7,,ii7 missing information or inadequate explanations2 or 7,,iii7 potential inconsistencies with this ,act4 7#f7 ,prior approval before registration 7,a7 ,in general ,a person applying for registration with the ,commission for the purposes of listing or offering a digital commodity for trading in a digital commodity cash or spot market may request that the ,commission grant prior approval for the person to list or offer the digital commodity on being registered with the ,commission4 7,b7 ,request for prior approval ,a person seeking prior approval under subparagraph 7,a7 shall furnish the ,commission with a written certification that the digital commodity meets the requirements of this ,act 7including the regulations prescribed under this ,act7 and the information described in paragraph 7#b74 7,c7 ,deadline ,the ,commission shall take final action on a request for prior approval not later than #ij business days after submission of the request1 unless the person submitting the request agrees to an extension of the time limitation established under this subparagraph4 7,d7 ,disapproval 7i7 ,in general ,the ,commission shall approve the listing of the digital commodity requested under subparagraph 7,a7 unless the ,commission finds that the listing is inconsistent with this ,act or the rules and regulations prescribed under this ,act4 7ii7 ,analysis required ,the ,commission shall include1 with any findings made under clause 7i71 a detailed analysis of the factors on which the decision is based4 7iii7 ,public findings ,the ,commission shall make public any disapproval decision1 and any related findings and analysis1 made under this subparagraph4 7#g7 ,eligible entity defined ,in this subsection1 the term eligible entity means a registered entity or group of registered entities acting jointly4 4 #bjd4 ,registration of digital commodity exchanges 7a7 ,in general ,the ,commodity ,exchange ,act is amended by inserting after section #e;h 7#g ,u4,s4,c4 #g;b-#c7 the following3 #e;i4 ,registration of digital commodity exchanges 7a7 ,in general 7#a7 ,registration 7,a7 ,in general ,a trading facility that offers or seeks to offer a cash or spot market in at least #a digital commodity shall register with the ,commission as a digital commodity exchange4 7,b7 ,application 7i7 ,in general ,a person desiring to register as a digital commodity exchange shall submit to the ,commission an application in such form and containing such information as the ,commission shall require for the purpose of making the determinations required for approval4 7ii7 ,rulemaking required ,the ,commission shall1 by rule1 prescribe the contents of an application under clause 7i71 including governance1 resources1 systems safeguards1 surveillance1 and conflict management4 7,c7 ,exemptions ,a trading facility that offers or seeks to offer a cash or spot market in at least #a digital commodity shall not be required to register under this section if the trading facility-- 7i7 serves only customers in a single ,state1 territory1 or possession of the ,united ,states2 7ii7 permits no more than a de minimis amount of trading activity1 as the ,commission may determine by rule or regulation1 in a digital commodity2 or 7iii7 is already registered as a designated contract market1 provided that the trading facility shall-- 7,i7 provide reasonable notice to the ,commission of its intention to engage in offering a cash or spot market in at least #a digital commodity2 and 7,,ii7 comply with all other provisions of this ,act and the rules promulgated thereunder as they apply to a digital commodity exchange4 7#b7 ,additional registrations 7,a7 ,rules ,in order to foster the development of fair and orderly markets1 protect customers1 and promote responsible innovation1 the ,commission shall-- 7i7 prescribe rules to exempt an entity registered with the ,commission under more than #a section of this ,act from duplicative1 conflicting1 or unduly burdensome provisions of this ,act and the rules under this ,act2 7ii7 prescribe rules establishing requirements for the identification1 mitigation1 and resolution of conflicts of interest among and across affiliated entities or entities with multiple registrations under this ,act1 including conflicts of interest related to vertically integrated market structures and their varying responsibilities and activities2 and 7iii7 after an analysis of the risks and benefits1 prescribe rules to provide for portfolio margining in accordance with section #ajc7;e7 of the ,digital ,commodity ,intermediaries ,act4 7,b7 ,registration required ,a person required to be registered as a digital commodity exchange under this section shall register with the ,commission as such regardless of whether the person is registered with another ,state or ,federal regulator4 7b7 ,trading 7#a7 ,prohibition on certain trading practices 7,a7 ,contracts designed to defraud or mislead ,section #d;b shall apply to any agreement1 contract1 or transaction in a digital commodity as if the agreement1 contract1 or transaction were a contract of sale of a commodity for future delivery4 7,b7 ,prohibited transactions ,section #d;c shall apply to any agreement1 contract1 or transaction in a digital commodity as if the agreement1 contract1 or transaction were a transaction involving the purchase or sale of a commodity for future delivery4 7,c7 ,enforcement authority ,section #d;b-#a shall apply to any agreement1 contract1 or transaction in a digital commodity as if the agreement1 contract1 or transaction were a contract of sale of a commodity for future delivery4 7#b7 ,prohibition on acting as a counterparty 7,a7 ,in general ,a digital commodity exchange or any affiliate of a digital commodity exchange shall not trade on or subject to the rules of the digital commodity exchange for its own account4 7,b7 ,exceptions ,subject to the limitations described in subparagraph 7,c71 a digital commodity exchange or any affiliate of a digital commodity exchange may trade on the digital commodity exchange for its own account so long as the trading is not solely for the purpose of the profit of the digital commodity exchange1 including the following transactions3 7i7 ,customer direction ,a transaction for1 or entered into at the direction of1 or for the benefit of1 an unaffiliated customer4 7ii7 ,liquidity provision ,a transaction in connection with the provision of liquidity on the digital commodity exchange if conducted pursuant to policies and procedures reasonably designed to limit such activity to the reasonably expected customer demand for liquidity on the digital commodity exchange4 7iii7 ,risk-mitigating hedging ,a transaction in connection with risk-mitigating hedging activities that are designed to reduce specific risks to the digital commodity exchange or its affiliate in connection with and related to its digital commodity activities4 7,c7 ,rulemaking ,the ,commission shall adopt rules establishing appropriate conditions1 requirements1 or other limitations on the use of the exceptions described in subparagraph 7,b7 that are necessary for the protection of customers1 the promotion of innovation1 or the maintenance of fair1 orderly1 and efficient markets1 which shall require that the digital commodity exchange has put in place adequate protections against conflicts of interest1 such as timely and effective disclosure to clients1 customers1 and counterparties of any material conflict of interest or information barriers reasonably designed to protect against such conflicts of interest4 7,d7 ,notice requirement ,in order for a digital commodity exchange or any affiliate of a digital commodity exchange to engage in trading on the affiliated digital commodity exchange pursuant to subparagraph 7,b71 the digital commodity exchange or affiliate shall provide to the ,commission notice that shall enumerate how any proposed activity is consistent with the exceptions described in subparagraph 7,b7 and the purposes of this ,act4 7,e7 ,commission visibility into liquidity provision ,a digital commodity exchange shall report to the ,commission such quantitative metrics as the ,commission determines1 by rule1 to be appropriate to provide the ,commission with sufficient visibility into the activities of the digital commodity exchange or its affiliates in reliance on subparagraph 7,b77ii74 7c7 ,core principles for digital commodity exchanges 7#a7 ,compliance with core principles 7,a7 ,in general ,to be registered1 and maintain registration1 as a digital commodity exchange1 a digital commodity exchange shall comply with-- 7i7 the core principles described in this subsection2 and 7ii7 any requirement that the ,commission may impose by rule or regulation pursuant to section #h;a7#e74 7,b7 ,reasonable discretion of a digital commodity exchange ,unless otherwise determined by the ,commission by rule or regulation1 a digital commodity exchange shall have reasonable discretion in establishing the manner in which the digital commodity exchange complies with the core principles described in this subsection4 7#b7 ,compliance with rules ,a digital commodity exchange shall-- 7,a7 establish and enforce compliance with any rule of the digital commodity exchange1 including-- 7i7 the terms and conditions of the trades traded or processed on or through the digital commodity exchange2 and 7ii7 any limitation on access to the digital commodity exchange2 7,b7 establish and enforce trading1 trade processing1 and participation rules that will deter abuses and have the capacity to detect1 investigate1 and enforce those rules1 including means-- 7i7 to provide market participants with impartial access to the market2 and 7ii7 to capture information that may be used in establishing whether rule violations have occurred2 and 7,c7 establish rules governing the operation of the exchange1 including rules specifying trading procedures to be used in entering and executing orders traded or posted on the exchange4 7#c7 ,listing standards for digital commodities 7,a7 ,not readily susceptible to manipulation ,a digital commodity exchange shall permit trading only in a digital commodity that is not readily susceptible to manipulation4 7,b7 ,disclosures to the ,securities and ,exchange ,commission ,a digital commodity exchange shall establish policies and procedures to permit trading in a digital commodity only if-- 7i7 disclosures with respect to the digital commodity required under1 as applicable1 section #d;,b of the ,securities ,act of #aicc have been filed with the ,securities and ,exchange ,commission2 or 7ii7 such other similar information that is related to the ongoing development plan of the blockchain system and is able to be publicly ascertained1 as the ,commission may1 by rule or regulation1 require1 has been provided to the public4 7,c7 ,public information requirements 7i7 ,in general ,a digital commodity exchange shall-- 7,i7 permit trading in a digital commodity only if the digital commodity exchange reasonably determines that the information required by clause 7ii7 is correct1 current1 and available to the public2 7,,ii7 establish policies and procedures to determine that the information provided pursuant to clause 7ii7 is correct1 current1 and available to the public2 and 7,,iii7 communicate in a fair and balanced manner based on principles of fair dealing and good faith4 7ii7 ,required information ,with respect to a digital commodity and each blockchain system to which the digital commodity relates for which the digital commodity exchange will make the digital commodity available to the customers of the digital commodity exchange1 the information required by this clause is the following3 7,i7 ,source code ,the source code for any blockchain system to which the digital commodity relates4 7,,ii7 ,transaction history ,a description of the steps necessary to independently access1 search1 and verify the transaction history of any blockchain system to which the digital commodity relates1 to the extent any such independent access1 search1 and verification activities are technically feasible with respect to such blockchain system4 7,,iii7 ,digital commodity economics ,a narrative description of the purpose of any blockchain system to which the digital commodity relates and the operation of any such blockchain system1 including-- 7aa7 information explaining the launch and supply process1 including the number of digital assets to be issued in an initial allocation1 the total number of digital commodities to be created1 the release schedule for the digital commodities1 and the total number of digital commodities then outstanding2 7bb7 information detailing any applicable consensus mechanism or process for validating transactions1 method of generating or mining digital commodities1 and any process for burning or destroying digital commodities on the blockchain system2 7cc7 an explanation of governance mechanisms for implementing changes to the blockchain system or forming consensus among holders of the digital commodities2 and 7dd7 sufficient information for a third party to create a tool for verifying the transaction history of the digital commodity4 7,,iv7 ,trading volume and volatility ,the trading volume and volatility of the digital commodity on the exchange4 7,v7 ,customer protections 7aa7 ,information about the material risks and characteristics of the digital commodity4 7bb7 ,any material incentives or conflicts of interest that the digital commodity exchange may have in connection with the listing of the digital commodity4 7cc7 ,information required by the ,commission by rule or regulation pertaining to marketing and advertising1 including testimonials and endorsements4 7,,vi7 ,additional information ,such additional information as the ,commission shall determine by rule or regulation to be necessary for a customer to understand the financial and operational risks of a digital commodity1 and to be practically feasible to provide4 7#d7 ,monitoring of trading and trade processing 7,a7 ,in general ,a digital commodity exchange shall provide a competitive1 open1 and efficient market and mechanism for executing transactions that protects the price discovery process of trading on the exchange4 7,b7 ,protection of markets and market participants ,a digital commodity exchange shall establish and enforce rules-- 7i7 to protect markets and market participants from abusive practices committed by any party1 including abusive practices committed by a party acting as an agent for a participant2 and 7ii7 to promote fair and equitable trading on the exchange4 7,c7 ,trading procedures ,a digital commodity exchange shall-- 7i7 establish and enforce rules or terms and conditions defining1 or specifications detailing-- 7,i7 trading procedures to be used in entering and executing orders traded on or through the facilities of the digital commodity exchange2 and 7,,ii7 procedures for trade processing of digital commodities on or through the facilities of the digital commodity exchange2 and 7ii7 monitor trading in digital commodities to prevent manipulation1 price distortion1 and disruptions1 through surveillance1 compliance1 and disciplinary practices and procedures1 including methods for conducting real-time monitoring of trading and comprehensive and accurate trade reconstructions4 7#e7 ,ability to obtain information ,a digital commodity exchange shall-- 7,a7 establish and enforce rules that will allow the exchange to obtain any necessary information to perform any of the functions described in this section2 7,b7 provide the information to the ,commission on request2 and 7,c7 have the capacity to carry out such international information-sharing agreements as the ,commission may require4 7#f7 ,emergency authority ,a digital commodity exchange shall adopt rules to provide for the exercise of emergency authority1 in consultation or cooperation with the ,commission or a registered entity1 as is necessary and appropriate1 including the authority to facilitate the liquidation or transfer of open positions in any digital commodity or to suspend or curtail trading in a digital commodity4 7#g7 ,timely publication of trading information 7,a7 ,in general ,a digital commodity exchange shall make public on its website timely information on price1 trading volume1 and other trading data on digital commodities to the extent prescribed by the ,commission by rule or regulation4 7,b7 ,capacity of digital commodity exchange ,a digital commodity exchange shall have the capacity to electronically capture and transmit trade information with respect to transactions executed on the exchange4 7#h7 ,recordkeeping and reporting 7,a7 ,in general ,a digital commodity exchange shall-- 7i7 maintain records relating to the business of the digital commodity exchange1 including a complete audit trail1 in a form and manner acceptable to the ,commission for a period of #e years2 7ii7 report to the ,commission1 in a form and manner acceptable to the ,commission1 such information as the ,commission determines to be necessary or appropriate for the ,commission to perform the duties of the ,commission under this ,act2 7iii7 keep any such records of digital commodities that relate to a security open to inspection and examination by the ,securities and ,exchange ,commission2 and 7iv7 provide to the ,commission an annual financial statement certified by an independent public accountant4 7,b7 ,providing information ,a digital commodity exchange shall provide to the ,commission 7including any designee of the ,commission7 information under subparagraph 7,a7 in such form and at such frequency as is required by the ,commission4 7#i7 ,antitrust considerations ,unless necessary or appropriate to achieve the purposes of this ,act1 a digital commodity exchange shall not-- 7,a7 adopt any rules or take any actions that result in any unreasonable restraint of trade2 or 7,b7 impose any material anticompetitive burden on trading4 7#aj7 ,conflicts of interest ,a digital commodity exchange shall establish and enforce rules-- 7,a7 to minimize conflicts of interest in the decision-making processes of the digital commodity exchange1 including conflicts of interest that might potentially bias the judgement or supervision of the digital commodity exchange and contravene the principles of fair and equitable trading2 7,b7 to minimize conflicts of interest that might arise-- 7i7 out of transactions or arrangements with affiliates 7including affiliates engaging in digital commodity activities72 or 7ii7 as a result of multiple registrations under this ,act2 7,c7 to establish a process for resolving conflicts of interest referred to in subparagraphs 7,a7 and 7,b72 7,d7 to require disclosure by the digital commodity exchange of any material incentives or conflicts of interest that the digital commodity exchange is unable to resolve1 or prohibit the conditions giving rise to such conflicts of interest not able to be resolved1 as the ,commission may determine to be appropriate2 and 7,e7 relating to such additional matters as the ,commission shall determine by rule or regulation to be necessary in the public interest4 7,f7 ,affiliates ,a digital commodity exchange may permit an affiliated digital commodity broker or digital commodity dealer to facilitate impartial access to the digital commodity exchange1 subject to the rules prescribed by the ,commission with respect to conflicts of interest regarding transactions or arrangements with affiliates4 7#aa7 ,financial resources 7,a7 ,in general ,a digital commodity exchange shall have adequate financial1 operational1 and managerial resources1 as shall be determined by the ,commission by rule or regulation1 to discharge each responsibility of the digital commodity exchange4 7,b7 ,minimum amount of financial resources ,a digital commodity exchange shall possess financial resources that1 at a minimum1 exceed the sum of-- 7i7 the total amount that would enable the digital commodity exchange to cover the operating costs of the digital commodity exchange for a #a-year period1 as calculated on a rolling basis2 and 7ii7 the total amount necessary to meet the financial obligations of the digital commodity exchange to all customers of the digital commodity exchange4 7,c7 ,prohibition ,the resources used to meet the requirements under subparagraph 7,b7 shall not include digital commodities originated by the digital commodity exchange or affiliates of the digital commodity exchange4 7#ab7 ,disciplinary procedures ,a digital commodity exchange shall establish and enforce disciplinary procedures that authorize the digital commodity exchange to discipline1 suspend1 or expel members or market participants that violate the rules of the digital commodity exchange1 or similar methods for performing the same functions1 including delegation of the functions to third parties4 7#ac7 ,governance fitness standards 7,a7 ,governance arrangements ,a digital commodity exchange shall establish governance arrangements that are transparent to fulfill public interest requirements4 7,b7 ,fitness standards ,a digital commodity exchange shall establish and enforce appropriate fitness standards for-- 7i7 officers and directors2 7ii7 any individual or entity with direct access to1 or control of1 customer assets2 and 7iii7 other persons1 as determined by the ,commission by rule or regulation4 7,c7 ,board of directors ,except as otherwise provided by the ,commission by rule1 regulation1 or order1 a digital commodity exchange shall be governed by a board of directors1 subject to the following requirements3 7i7 ,the composition of the board of directors shall be sufficient to maintain appropriate independence1 as determined by the ,commission4 7ii7 ,a digital commodity exchange shall endeavor to recruit individuals to serve on the board of directors from among1 and to have the composition of the board reflect1 a broad and culturally diverse pool of qualified candidates4 7#ad7 ,system safeguards ,a digital commodity exchange shall-- 7,a7 establish and maintain a program of risk analysis and oversight to identify and minimize sources of operational and security risks 7including cybersecurity risks71 through the development of appropriate controls and procedures1 and automated systems that-- 7i7 are reliable and secure2 and 7ii7 have adequate scalable capacity2 7,b7 establish and maintain emergency procedures1 backup resources1 and a plan for disaster recovery that allow for-- 7i7 the timely recovery and resumption of operations2 7ii7 the fulfillment of the responsibilities and obligations of the digital commodity exchange2 and 7iii7 the appropriate safeguarding and ability to access the private keys or other credentials necessary to transmit digital commodities in the possession1 custody1 or control of the digital commodity exchange2 and 7,c7 periodically conduct tests to verify that the backup resources of the digital commodity exchange are sufficient to ensure continued-- 7i7 order processing and trade matching2 7ii7 price reporting2 7iii7 market surveillance2 7iv7 maintenance of a comprehensive and accurate audit trail2 and 7v7 access and ability to transfer digital commodities in the possession1 custody1 or control of the digital commodity exchange4 7#ae7 ,risk management procedures ,a digital commodity exchange shall establish robust and professional risk management systems adequate for managing the day-to-day business of the digital commodity exchange4 7d7 ,consumer protection ,the ,commission shall adopt rules or regulations imposing customer protection requirements that-- 7#a7 require disclosure by a digital commodity exchange to a customer 7other than another digital commodity exchange registered under this section71 which shall be updated in a timely manner to reflect material changes1 and in accordance with paragraph 7#e71 of-- 7,a7 the underlying technology of any digital commodity that is listed on the digital commodity exchange2 7,b7 the functionality and utility of any digital commodity that is listed on the digital commodity exchange2 7,c7 the governance structure of any digital commodity that is listed on the digital commodity exchange2 7,d7 the trading volume and volatility of any digital commodity that is listed on the digital commodity exchange2 7,e7 information about the material risks and characteristics of any applicable digital commodities2 and 7,f7 any material incentives or conflicts of interest that the digital commodity exchange may have in connection with the listing of any applicable digital commodities2 7#b7 establish a duty for a digital commodity exchange to communicate in a fair and balanced manner based on principles of fair dealing and good faith2 7#c7 establish standards governing digital commodity exchange marketing and advertising1 including testimonials and endorsements2 7#d7 establish such other standards and requirements as the ,commission may determine are-- 7,a7 appropriate for the protection of customers2 or 7,b7 otherwise in furtherance of the purposes of this ,act2 and 7#e7 standardize and simplify disclosures under paragraph 7#a71 including requiring that disclosures-- 7,a7 be conspicuous2 7,b7 use plain language comprehensible to customers2 and 7,c7 succinctly explain the information that is required to be communicated to the customer4 7e7 ,information-sharing 7#a7 ,in general ,subject to section #h1 and on request1 the ,commission shall share information collected under subsection 7c77#h77;,a7 with-- 7,a7 the ,board of ,governors of the ,federal ,reserve ,system2 7,b7 the ,securities and ,exchange ,commission2 7,c7 each appropriate ,federal banking agency2 7,d7 each appropriate ,state bank supervisor 7as defined in section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac772 7,e7 the ,financial ,stability ,oversight ,council2 7,f7 the ,department of ,justice2 7,g7 ,state securities regulators2 and 7,h7 any other person that the ,commission determines to be appropriate1 including-- 7i7 foreign financial supervisors 7including foreign futures authorities72 7ii7 foreign central banks2 and 7iii7 foreign ministries4 7#b7 ,confidentiality agreement ,before the ,commission may share information with any entity described in paragraph 7#a71 the ,commission shall receive a written agreement from the entity stating that the entity shall abide by the confidentiality requirements described in section #h relating to the information on digital commodities that is provided4 7f7 ,holding of customer assets 7#a7 ,in general ,a digital commodity exchange shall hold customer money1 assets1 and property in a manner to minimize the risk of loss to the customer or unreasonable delay in customer access to the money1 assets1 and property of the customer4 7#b7 ,qualified digital asset custodian ,each digital commodity exchange shall hold in a qualified digital asset custodian each unit of a digital asset that is-- 7,a7 the property of a customer of the digital commodity exchange2 7,b7 required to be held by the digital commodity exchange under subsection 7c77#aa72 or 7,c7 otherwise so required by the ,commission to reasonably protect customers and customer assets or promote the public interest4 7#c7 ,segregation of funds 7,a7 ,in general ,a digital commodity exchange shall treat and deal with all money1 assets1 and property that is received by the digital commodity exchange1 or accrues to a customer as the result of trading in digital commodities1 as belonging to the customer4 7,b7 ,commingling prohibited ,money1 assets1 and property described in subparagraph 7,a7 shall be separately accounted for and shall not be commingled with the funds of the digital commodity exchange or be used to margin1 secure1 or guarantee any trades or accounts of any customer or person other than the person for whom the same are held4 7,c7 ,exceptions 7i7 ,use of funds 7,i7 ,in general ,notwithstanding subparagraph 7,a71 money1 assets1 and property described in subparagraph 7,a7 may1 for convenience1 be commingled and deposited in the same account or accounts with any bank1 trust company1 derivatives clearing organization1 or qualified digital asset custodian4 7,,ii7 ,withdrawal ,notwithstanding subparagraph 7,a71 such share of the money1 assets1 and property described in subparagraph 7,a7 as in the normal course of business shall be necessary to margin1 guarantee1 secure1 transfer1 adjust1 or settle a contract of sale of a digital commodity with a registered entity may be withdrawn and applied to such purposes1 including the payment of commissions1 brokerage1 interest1 taxes1 storage1 and other charges1 lawfully accruing in connection with the contract of sale4 7ii7 ,commission action ,notwithstanding subparagraph 7,a71 in accordance with such terms and conditions as the ,commission may prescribe by rule1 regulation1 or order1 any money1 assets1 or property of the customers of a digital commodity exchange may be commingled and deposited in customer accounts with any other money1 assets1 or property received by the digital commodity exchange and required by the ,commission to be separately accounted for and treated and dealt with as belonging to the customer of the digital commodity exchange4 7#d7 ,permitted investments ,money described in paragraph 7#c7 may be invested in obligations of the ,united ,states1 in general obligations of any ,state or of any political subdivision of a ,state1 and in obligations fully guaranteed as to principal and interest by the ,united ,states1 or in any high-quality liquid asset that the ,commission may by rule or regulation prescribe1 and such investments shall be made in accordance with such rules and regulations and subject to such conditions as the ,commission shall prescribe4 7#e7 ,customer protection during bankruptcy 7,a7 ,customer property ,all assets held on behalf of a customer by a digital commodity exchange1 and all money1 assets1 and property of any customer received by a digital commodity exchange for trading or custody1 or to facilitate1 margin1 guarantee1 or secure contracts of sale of a digital commodity 7including money1 assets1 or property accruing to the customer as the result of the transactions71 shall be considered customer property for purposes of section #gfa of title #aa1 ,united ,states ,code4 7,b7 ,transactions ,a transaction involving the sale of a unit of a digital commodity occurring on or subject to the rules of a digital commodity exchange shall be considered a contract for the purchase or sale of a commodity for future delivery1 on or subject to the rules of1 a contract market or board of trade for purposes of the definition of commodity contract in section #gfa of title #aa1 ,united ,states ,code4 7,c7 ,exchanges ,a digital commodity exchange shall be considered a futures commission merchant for purposes of section #gfa of title #aa1 ,united ,states ,code4 7,d7 ,assets removed from segregation ,assets removed from segregation due to a customer election under paragraph 7#g7 shall not be considered customer property for purposes of section #gfa of title #aa1 ,united ,states ,code4 7#f7 ,misuse of customer property 7,a7 ,in general ,it shall be unlawful-- 7i7 for any digital commodity exchange that has received any customer money1 assets1 or property for custody to dispose of1 or use any such money1 assets1 or property as belonging to the digital commodity exchange or any person other than a customer of the digital asset exchange2 or 7ii7 for any other person1 including any depository1 other digital commodity exchange1 or digital asset custodian that has received any customer money1 assets1 or property for deposit1 to hold1 dispose of1 or use any such money1 assets1 or property as belonging to the depositing digital commodity exchange or any person other than the customers of the digital commodity exchange4 7,b7 ,use further defined ,for purposes of this paragraph1 the term use with respect to a digital commodity1 includes utilizing any unit of a digital asset to participate in a blockchain service 7as defined in paragraph 7#g77;,d77 or a decentralized governance system associated with the digital commodity or the blockchain system to which the digital commodity relates in any manner other than that expressly directed by the customer from whom the unit of a digital commodity was received4 7#g7 ,participation in blockchain services 7,a7 ,use of funds ,a digital commodity exchange 7or a designee of a digital commodity exchange7 may use a unit of a digital commodity belonging to a customer to provide a blockchain service for a blockchain system to which the unit of the digital commodity relates if for each use-- 7i7 the customer expressly permits the use1 in writing1 to the digital commodity exchange2 and 7ii7 the digital commodity exchange complies with subparagraph 7,b74 7,b7 ,limitations 7i7 ,in general ,the ,commission shall1 by rule1 establish notice and written disclosure requirements and any other limitations and rules related to a permission provided under subparagraph 7,a7 or the treatment of customer assets in the event of an insolvency1 resolution1 or liquidation proceeding1 including a description of the manner in which any digital commodity would be treated in an insolvency1 resolution1 or liquidation proceeding1 and how the treatment of digital commodities differs from the treatment of any other assets in the event of an insolvency1 resolution1 or liquidation proceeding1 that are reasonably necessary to protect customers1 including eligible contract participants1 non-eligible contract participants1 and any other class of customers4 7ii7 ,customer choice ,a digital commodity exchange may not-- 7,i7 require a customer to provide the permission referred to in subparagraph 7,a7 as a condition of doing business on the exchange2 or 7,,ii7 penalize a customer for not providing the permission referred to in subparagraph 7,a74 7,c7 ,requirements ,the ,commission may1 by rule1 modify the requirements of paragraph 7#b7 or 7#c7 to facilitate the use of a unit of a digital commodity belonging to a customer to provide a blockchain service4 7,d7 ,blockchain service defined ,in this paragraph1 the term blockchain service means any activity relating to validating transactions on a blockchain system1 providing security for a blockchain system1 or other similar activity required for the ongoing operation of a blockchain system4 7g7 ,market access requirements 7#a7 ,affiliated commodity brokers ,a registered digital commodity exchange may permit an affiliated digital commodity broker to facilitate impartial access to the digital commodity exchange4 7#b7 ,additional requirements ,the ,commission shall1 by rule1 impose any additional requirements related to the operations and activities of the digital commodity exchange and an affiliated digital commodity broker necessary to protect market participants1 promote fair and equitable trading on the digital commodity exchange1 provide market participants with impartial access to the market1 protect customer funds1 and promote responsible innovation4 7h7 ,designation of chief compliance officer 7#a7 ,in general ,a digital commodity exchange shall designate an individual to serve as a chief compliance officer1 who shall be solely responsible to the digital commodity exchange and not to any other affiliated entity or other entity regulated under this ,act4 7#b7 ,duties ,the chief compliance officer of a digital commodity exchange shall-- 7,a7 report directly to the board or to the senior officer of the exchange2 7,b7 review compliance with the core principles in this section2 7,c7 in consultation with the board of the exchange1 a body performing a function similar to that of a board1 or the senior officer of the exchange1 resolve any conflicts of interest that may arise2 7,d7 establish and administer the policies and procedures required to be established pursuant to this section2 7,e7 ensure compliance with this ,act and the rules and regulations issued under this ,act1 including rules prescribed by the ,commission pursuant to this section2 and 7,f7 establish procedures for the remediation of noncompliance issues found during compliance office reviews1 look-backs1 internal or external audit findings1 self-reported errors1 or through validated complaints4 7#c7 ,requirements for procedures ,in establishing procedures under paragraph 7#b77;,f71 the chief compliance officer shall design the procedures to establish the handling1 management response1 remediation1 retesting1 and closing of noncompliance issues4 7#d7 ,annual reports 7,a7 ,in general ,in accordance with rules that shall be prescribed by the ,commission1 the chief compliance officer of a digital commodity exchange shall annually prepare and sign a report that contains a description of-- 7i7 the compliance of the digital commodity exchange with this ,act2 and 7ii7 the policies and procedures1 including the code of ethics and conflicts of interest policies1 of the digital commodity exchange4 7,b7 ,requirements ,the chief compliance officer shall-- 7i7 submit each report described in subparagraph 7,a7 with the appropriate financial report of the digital commodity exchange that is required to be submitted to the ,commission pursuant to this section2 and 7ii7 include in the report a certification that1 under penalty of law1 the report is accurate and complete4 7i7 ,appointment of trustee 7#a7 ,in general ,if a proceeding under section #e;e results in the suspension or revocation of the registration of a digital commodity exchange1 or if a digital commodity exchange withdraws from registration1 the ,commission1 on notice to the digital commodity exchange1 may apply to the appropriate ,united ,states district court for the judicial district in which the digital commodity exchange is located for the appointment of a trustee4 7#b7 ,assumption of jurisdiction ,if the ,commission applies for appointment of a trustee under paragraph 7#a7-- 7,a7 the court may take exclusive jurisdiction over the digital commodity exchange and the records and assets of the digital commodity exchange1 wherever located2 and 7,b7 if the court takes jurisdiction under subparagraph 7,a71 the court shall appoint the ,commission1 or a person designated by the ,commission1 as trustee with power to take possession and continue to operate or terminate the operations of the digital commodity exchange in an orderly manner for the protection of customers1 subject to such terms and conditions as the court may prescribe4 7j7 ,exemptions 7#a7 ,in general ,in order to promote responsible innovation and fair competition1 or protect customers1 the ,commission may 7on its own initiative or on application of the digital commodity exchange7 exempt1 either unconditionally or on stated terms or conditions or for stated periods and either retroactively or prospectively1 or both1 a digital commodity exchange from the requirements of this ,act1 if the ,commission determines that-- 7,a7 the exemption would be consistent with the public interest and the purposes of this ,act2 and 7,b7 the exemption will not have a material adverse effect on the ability of the ,commission or the digital commodity exchange to discharge regulatory or self-regulatory duties under this ,act4 7#b7 ,foreign exchanges 7,a7 ,in general ,the ,commission may exempt1 conditionally or unconditionally1 a digital commodity exchange from registration under this section if the ,commission finds that the digital commodity exchange is subject to comparable1 comprehensive supervision and regulation on a consolidated basis by the appropriate governmental authorities in the home country of the digital commodity exchange4 7,b7 ,transition period ,the ,commission may exempt a foreign digital commodity exchange from registration under this section for the #b-year period following the date of enactment of this section if-- 7i7 the foreign digital commodity exchange-- 7,i7 keeps the books and records of the foreign digital commodity exchange open to inspection and examination by any representative of the ,commission upon reasonable request2 and 7,,ii7 reports to the ,commission1 in a form and manner acceptable to the ,commission1 such information as the ,commission determines to be reasonably necessary or appropriate for the ,commission to perform the duties of the ,commission under this ,act2 and 7ii7 the appropriate government authorities in the home country of the foreign digital commodity exchange-- 7,i7 certify that the foreign digital commodity exchange-- 7aa7 is subject to-- 7,,aa7 supervision and regulation on a consolidated basis by a governmental authority in its home country1 including requirements relating to beneficial ownership1 control persons1 governance1 risk management1 financial reporting1 and market integrity2 and 7,,bb7 clear and enforceable managerial and supervisory responsibility at the consolidated level2 and 7bb7 is in good standing and not subject to unresolved1 material enforcement actions relating to market integrity1 customer protection1 or financial crime2 and 7,,ii7 enter into a memorandum of understanding with the ,commission in which those appropriate government authorities agree to provide to the ,commission information regarding the foreign digital commodity exchange that the ,commission requests during that #b-year period4 7,c7 ,suspension or revocation ,the ,commission may suspend or revoke an exemption under subparagraph 7,b7 if the ,commission determines that the foreign digital commodity exchange or the appropriate government authority in the home country of the foreign digital commodity exchange fails to substantially comply with the requirements described in subparagraph 7,b74 7k7 ,federal preemption 7#a7 ,in general ,the ,commission shall have exclusive jurisdiction over any digital commodity exchange registered under this section with respect to activities and transactions subject to this ,act4 7#b7 ,preservation of authority ,nothing in this subsection shall affect the ability of a ,state or local agency to investigate and bring enforcement actions regarding fraud1 deceit1 or unfair or deceptive acts or practices4 7l7 ,regulations ,the ,commission shall prescribe such rules and regulations as are appropriate for the implementation of this section4 7m7 ,customer defined ,in this section1 the term customer means any person that maintains an account for the trading of digital commodities directly with a digital commodity exchange 7other than a person that is owned or controlled1 directly or indirectly1 by the digital commodity exchange7 for its own behalf or on behalf of any other person4 4 7b7 ,private rights of action ,section #bb of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #be7 is amended-- 7#a7 in subsection 7a77#a7-- 7,a7 in subparagraph 7,b7-- 7i7 by striking commodity7 or any swap2 and inserting commodity71 any swap1 or any digital commodity transaction22 and 7ii7 by striking to make such contract and all that follows through the semicolon at the end and inserting to make such contract1 any swap1 or any digital commodity transaction22 7,b7 in subparagraph 7,c71 by conforming the margin of clause 7iv7 to the margin of clauses 7i7 through 7iii72 and 7,c7 in subparagraph 7,d7-- 7i7 in the matter preceding clause 7i71 by striking subparagraph 7,b7 hereof or swap and inserting subparagraph 7,b71 a swap1 or a digital commodity2 and 7ii7 in clause 7ii71 by striking any such contract or swap and inserting any such contract1 swap1 or digital commodity2 and 7#b7 in subsection 7b77#a77;,a71 by inserting #e;i1 after #e;h14 #bje4 ,registration and regulation of digital commodity brokers and dealers ,the ,commodity ,exchange ,act is amended by inserting after section #dt 7#g ,u4,s4,c4 #ft7 the following3 #du4 ,registration and regulation of digital commodity brokers and dealers 7a7 ,registration 7#a7 ,requirement ,it shall be unlawful for any person to act as a digital commodity broker or digital commodity dealer unless the person is registered as such with the ,commission4 7#b7 ,exemptions ,a person acting as a digital commodity broker or digital commodity dealer shall not be required to register under this section if the person-- 7,a7 engages in no more than a de minimis amount of brokering or dealing activity1 as the ,commission may determine by rule or regulation1 in a digital commodity2 7,b7 serves only customers in a single ,state or territory2 or 7,c7 is already registered as a futures commission merchant1 provided that the person shall-- 7i7 provide written notice to the ,commission and to any self-regulatory organization of which it is a member of its intention to act as a digital commodity broker2 and 7ii7 comply with all other provisions of this ,act and the rules promulgated thereunder and any self-regulatory organization rules as they apply to a digital commodity broker4 7#c7 ,additional registration 7,a7 ,rules ,in order to foster the development of fair and orderly markets1 protect customers1 and promote responsible innovation1 the ,commission shall-- 7i7 prescribe rules to exempt an entity registered with the ,commission under more than #a section of this ,act from duplicative1 conflicting1 or unduly burdensome provisions of this ,act and the rules under this ,act2 7ii7 prescribe rules establishing requirements for the identification1 mitigation1 and resolution of conflicts of interest among and across affiliated entities or entities with multiple registrations under this ,act1 including conflicts of interest related to vertically integrated market structures and their varying responsibilities and activities2 and 7iii7 after an analysis of the risks and benefits1 prescribe rules to provide for portfolio margining in accordance with section #ajc7;e7 of the ,digital ,commodity ,intermediaries ,act4 7,b7 ,membership in a registered futures association ,any person required to be registered as a digital commodity broker or digital commodity dealer under this section shall become and remain a member of a registered futures association4 7,c7 ,harmonization ,in prescribing rules for digital commodity brokers or digital commodity dealers1 the ,commission shall1 to the greatest extent feasible1 seek to avoid duplication1 inconsistencies1 or burdens for a person registered in multiple capacities4 7b7 ,requirements 7#a7 ,in general ,a person shall register as a digital commodity broker or digital commodity dealer by filing a registration application with the ,commission4 7#b7 ,contents 7,a7 ,in general ,the application under paragraph 7#a7 shall be made in such form and manner as is prescribed by the ,commission1 and shall contain such information as the ,commission considers necessary concerning the business in which the applicant is or will be engaged4 7,b7 ,continual reporting ,a person that is registered as a digital commodity broker or digital commodity dealer shall continue to submit to the ,commission reports that contain such information pertaining to the business of the person as the ,commission may require4 7#c7 ,statutory disqualification ,except to the extent otherwise specifically provided by rule1 regulation1 or order1 it shall be unlawful for a digital commodity broker or digital commodity dealer to permit any person who is associated with a digital commodity broker or a digital commodity dealer and who is subject to a statutory disqualification to effect or be involved in effecting a contract of sale of a digital commodity on behalf of the digital commodity broker or the digital commodity dealer1 respectively1 if the digital commodity broker or digital commodity dealer1 respectively1 knew1 or in the exercise of reasonable care should have known1 of the statutory disqualification4 7c7 ,capital requirements 7#a7 ,in general ,each digital commodity broker and digital commodity dealer shall meet such minimum capital requirements as the ,commission may prescribe to address the risks associated with digital commodity trading and to ensure that the digital commodity broker or digital commodity dealer1 respectively1 is able1 at all times1 to meet and continue to meet the obligations of such a registrant4 7#b7 ,futures commission merchants and other dealers ,each futures commission merchant1 introducing broker1 digital commodity broker1 digital commodity dealer1 broker1 and dealer shall maintain sufficient capital to comply with the stricter of any applicable capital requirements to which the futures commission merchant1 introducing broker1 digital commodity broker1 digital commodity dealer1 broker1 or dealer1 respectively1 is subject under this ,act or the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;a et seq474 7d7 ,digital commodity trading not readily susceptible to manipulation ,a digital commodity broker or digital commodity dealer may only offer trades in digital commodities that are not readily susceptible to manipulation4 7e7 ,execution ,the ,commission shall prescribe rules and regulations regarding the execution of digital commodity transactions by a digital commodity broker or a digital commodity dealer with or on behalf of customers1 which shall address-- 7#a7 fair and objective pricing2 7#b7 the recording1 maintaining1 and disclosure of information2 7#c7 the protection of the price discovery process2 and 7#d7 requirements specific to digital commodity transactions with or on behalf of a customer who is not an eligible contract participant4 7f7 ,reporting and recordkeeping ,each digital commodity broker and digital commodity dealer shall-- 7#a7 make such reports as are required by the ,commission by rule or regulation regarding the transactions1 positions1 and financial condition of the digital commodity broker or digital commodity dealer1 respectively2 7#b7 keep books and records in such form and manner and for such period as shall be prescribed by the ,commission by rule or regulation2 and 7#c7 keep the books and records open to inspection and examination by any representative of the ,commission4 7g7 ,daily trading records 7#a7 ,in general ,each digital commodity broker and digital commodity dealer shall maintain daily trading records of the transactions of the digital commodity broker or digital commodity dealer1 respectively1 and all related records 7including related forward or derivatives transactions7 and recorded communications1 including electronic mail1 instant messages1 and recordings of telephone calls1 for such period as the ,commission shall require by rule or regulation4 7#b7 ,information requirements ,the daily trading records described in paragraph 7#a7 shall include such information as the ,commission shall require by rule or regulation4 7#c7 ,counterparty records ,each digital commodity broker and digital commodity dealer shall maintain daily trading records for each customer or counterparty in a manner and form that is identifiable with each digital commodity transaction4 7#d7 ,audit trail ,each digital commodity broker and digital commodity dealer shall maintain a complete audit trail for conducting comprehensive and accurate trade reconstructions4 7h7 ,business conduct standards 7#a7 ,in general ,each digital commodity broker and digital commodity dealer shall conform with such business conduct standards as the ,commission1 by rule or regulation1 shall prescribe related to-- 7,a7 fraud1 manipulation1 and other abusive practices involving spot digital commodity transactions 7including transactions that are offered but not entered into72 7,b7 diligent supervision of the business of the registered digital commodity broker or digital commodity dealer1 respectively2 and 7,c7 such other matters as the ,commission determines appropriate4 7#b7 ,business conduct requirements ,the ,commission shall1 by rule1 prescribe business conduct requirements that-- 7,a7 require disclosure by a registered digital commodity broker and registered digital commodity dealer to any counterparty to the transaction 7other than an eligible contract participant7 of-- 7i7 information about the material risks and characteristics of the digital commodity2 and 7ii7 information about the material risks and characteristics of the transaction2 7,b7 establish a duty for such a digital commodity broker and such a digital commodity dealer to communicate in a fair and balanced manner based on principles of fair dealing and good faith2 7,c7 establish standards governing digital commodity broker and digital commodity dealer marketing and advertising1 including testimonials and endorsements2 7,d7 establish a duty for digital commodity brokers and digital commodity dealers to provide fair1 transparent1 and objective pricing2 and 7,e7 establish such other standards and requirements as the ,commission may determine are appropriate for the protection of customers4 7#c7 ,prohibition on fraudulent practices ,it shall be unlawful for a digital commodity broker or digital commodity dealer to-- 7,a7 employ any device1 scheme1 or artifice to defraud any customer or counterparty2 7,b7 engage in any transaction1 practice1 or course of business that operates as a fraud or deceit on any customer or counterparty2 or 7,c7 engage in any act1 practice1 or course of business that is fraudulent1 deceptive1 or manipulative4 7i7 ,duties 7#a7 ,risk management procedures ,each digital commodity broker and digital commodity dealer shall establish robust and professional risk management systems adequate for managing the day-to-day business of the digital commodity broker or digital commodity dealer1 respectively4 7#b7 ,disclosure of general information ,each digital commodity broker and digital commodity dealer shall disclose to the ,commission information concerning-- 7,a7 the terms and conditions of the transactions of the digital commodity broker or digital commodity dealer1 respectively2 7,b7 the trading operations1 mechanisms1 and practices of the digital commodity broker or digital commodity dealer1 respectively2 7,c7 financial integrity protections relating to the activities of the digital commodity broker or digital commodity dealer1 respectively2 and 7,d7 other information relevant to trading in digital commodities by the digital commodity broker or digital commodity dealer1 respectively4 7#c7 ,ability to obtain information ,each digital commodity broker and digital commodity dealer shall-- 7,a7 establish and enforce internal systems and procedures to obtain any necessary information to perform any of the functions described in this section2 and 7,b7 provide the information to the ,commission1 on request4 7#d7 ,conflicts of interest ,each digital commodity broker and digital commodity dealer shall establish1 maintain1 and enforce written policies and procedures reasonably designed1 taking into consideration the nature of the business of the person1 as a result of multiple registrations under this ,act-- 7,a7 to establish a process for resolving conflicts of interest2 7,b7 to require disclosure by a digital commodity broker or digital commodity dealer of any material incentives or conflicts of interest that the digital commodity broker or digital commodity dealer is unable to resolve1 as the ,commission may determine to be appropriate2 and 7,c7 to address such other issues as the ,commission determines by rule or regulation to be necessary in the public interest4 7#e7 ,antitrust considerations ,unless necessary or appropriate to achieve the purposes of this ,act1 a digital commodity broker or digital commodity dealer shall not-- 7,a7 adopt any process or take any action that results in any unreasonable restraint of trade2 or 7,b7 impose any material anticompetitive burden on trading or clearing4 7j7 ,designation of chief compliance officer 7#a7 ,in general ,each digital commodity broker and digital commodity dealer shall designate an individual to serve as a chief compliance officer1 who shall be solely responsible to the digital commodity broker or digital commodity dealer and not to any other affiliated entity or other entity regulated under this ,act4 7#b7 ,duties ,the chief compliance officer of a registered digital commodity broker or a registered digital commodity dealer shall-- 7,a7 report directly to the board or to the senior officer of the registered digital commodity broker or registered digital commodity dealer2 7,b7 review the compliance of the registered digital commodity broker or registered digital commodity dealer with respect to the registered digital commodity broker and registered digital commodity dealer requirements described in this section2 7,c7 in consultation with the board of directors1 a body performing a function similar to the board1 or the senior officer of the organization1 resolve any conflicts of interest that may arise2 7,d7 be responsible for administering each policy and procedure that is required to be established pursuant to this section2 7,e7 ensure compliance with this ,act 7including regulations71 including each rule prescribed by the ,commission under this section2 7,f7 establish procedures for the remediation of noncompliance issues identified by the chief compliance officer through any-- 7i7 compliance office review2 7ii7 look-back2 7iii7 internal or external audit finding2 7iv7 self-reported error2 or 7v7 validated complaint2 and 7,g7 establish and follow appropriate procedures for the handling1 management response1 remediation1 retesting1 and closing of noncompliance issues4 7#c7 ,annual reports 7,a7 ,in general ,in accordance with rules that shall be prescribed by the ,commission1 the chief compliance officer of a registered digital commodity broker or a registered digital commodity dealer shall annually prepare and sign a report that contains a description of-- 7i7 the compliance of the registered digital commodity broker or registered digital commodity dealer with this ,act 7including regulations72 and 7ii7 each policy and procedure of the registered digital commodity broker or registered digital commodity dealer followed by the chief compliance officer 7including the code of ethics and conflict of interest policies74 7,b7 ,requirements ,the chief compliance officer shall ensure that a compliance report under subparagraph 7,a7-- 7i7 accompanies each appropriate financial report of the registered digital commodity broker or registered digital commodity dealer that is required to be furnished to the ,commission pursuant to this section2 and 7ii7 includes a certification that1 under penalty of law1 the compliance report is accurate and complete4 7k7 ,segregation of digital commodities 7#a7 ,holding of customer assets 7,a7 ,in general ,each digital commodity broker and digital commodity dealer shall hold customer money1 assets1 and property in a manner to minimize the risk of loss to the customer or unreasonable delay in customer access to the money1 assets1 and property of the customer4 7,b7 ,qualified digital asset custodian ,each digital commodity broker and digital commodity dealer shall hold in a qualified digital asset custodian each unit of a digital asset that is-- 7i7 the property of a customer or counterparty of the digital commodity broker or digital commodity dealer1 respectively2 7ii7 required to be held by the digital commodity broker or digital commodity dealer under subsection 7c72 or 7iii7 otherwise so required by the ,commission to reasonably protect customers and customer assets or promote the public interest4 7#b7 ,segregation of funds 7,a7 ,in general ,each digital commodity broker and digital commodity dealer shall treat and deal with all money1 assets1 and property that is received by the digital commodity broker or digital commodity dealer1 or accrues to a customer as the result of trading in digital commodities1 as belonging to the customer4 7,b7 ,commingling prohibited 7i7 ,in general ,except as provided in clause 7ii71 each digital commodity broker and digital commodity dealer shall separately account for money1 assets1 and property of a digital commodity customer1 and shall not commingle any such money1 assets1 or property with the funds of the digital commodity broker or digital commodity dealer1 respectively1 or use any such money1 assets1 or property to margin1 secure1 or guarantee any trades or accounts of any customer or person other than the person for whom the money1 assets1 or property are held4 7ii7 ,exceptions 7,i7 ,use of funds 7aa7 ,in general ,a digital commodity broker or digital commodity dealer may1 for convenience1 commingle and deposit in the same account or accounts with any bank1 trust company1 derivatives clearing organization1 or qualified digital asset custodian money1 assets1 and property of customers4 7bb7 ,withdrawal ,the share of the money1 assets1 and property described in item 7aa7 as in the normal course of business shall be necessary to margin1 guarantee1 secure1 transfer1 adjust1 or settle a contract of sale of a digital commodity with a registered entity may be withdrawn and applied to such purposes1 including the payment of commissions1 brokerage1 interest1 taxes1 storage1 and other charges1 lawfully accruing in connection with the contract4 7,,ii7 ,commission action ,in accordance with such terms and conditions as the ,commission may prescribe by rule1 regulation1 or order1 any money1 assets1 or property of the customers of a digital commodity broker or digital commodity dealer may be commingled and deposited in customer accounts with any other money1 assets1 or property received by the digital commodity broker or digital commodity dealer1 respectively1 and required by the ,commission to be separately accounted for and treated and dealt with as belonging to the customer of the digital commodity broker or digital commodity dealer1 respectively4 7#c7 ,permitted investments ,money described in paragraph 7#b7 may be invested in obligations of the ,united ,states1 in general obligations of any ,state or of any political subdivision of a ,state1 in obligations fully guaranteed as to principal and interest by the ,united ,states1 or in any high-quality liquid asset that the ,commission may by rule or regulation allow4 7#d7 ,customer protection during bankruptcy 7,a7 ,customer property ,all assets held on behalf of a customer by a digital commodity broker or digital commodity dealer1 and all money1 assets1 and property of any customer received by a digital commodity broker or digital commodity dealer for trading or custody1 or to facilitate1 margin1 guarantee1 or secure contracts of sale of a digital commodity 7including money1 assets1 or property accruing to the customer as the result of the transactions71 shall be considered customer property for purposes of section #gfa of title #aa1 ,united ,states ,code4 7,b7 ,transactions ,a purchase1 sale1 loan of1 margin loan or other extension of credit on1 repurchase1 reverse repurchase1 or other transaction involving a unit of a digital commodity occurring with a digital commodity broker or digital commodity dealer shall be considered-- 7i7 a contract for the purchase or sale of a commodity for future delivery on1 or subject to the rules of1 a contract market or board of trade for purposes of the definition of a commodity contract in section #gfa of title #aa1 ,united ,states ,code1 section #aa of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahba71 and section #baj of the ,dodd-,frank ,wall ,street ,reform and ,consumer ,protection ,act 7#ab ,u4,s4,c4 #ecij72 and 7ii7 a commodity contract for purposes of section #e7;b77#b77;,c7 of the ,securities ,investor ,protection ,act of #aigj 7#ae ,u4,s4,c4 #gh;eee7b77#b77;,c774 7,c7 ,brokers and dealers ,a digital commodity broker and a digital commodity dealer shall be considered a futures commission merchant for purposes of section #gfa of title #aa1 ,united ,states ,code1 section #aa of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahba71 and section #baj of the ,dodd-,frank ,wall ,street ,reform and ,consumer ,protection ,act 7#ab ,u4,s4,c4 #ecij74 7,d7 ,assets removed from segregation ,assets removed from segregation due to a customer election under paragraph 7#f7 shall not be considered customer property for purposes of section #gfa of title #aa1 ,united ,states ,code4 7#e7 ,misuse of customer property 7,a7 ,in general ,it shall be unlawful-- 7i7 for any digital commodity broker or digital commodity dealer that has received any customer money1 assets1 or property for custody to dispose of1 or use any such money1 assets1 or property as belonging to the digital commodity broker or digital commodity dealer1 respectively1 or any person other than a customer of the digital commodity broker or digital commodity dealer1 respectively2 or 7ii7 for any other person1 including any depository1 digital commodity exchange1 other digital commodity broker1 other digital commodity dealer1 or digital asset custodian that has received any customer money1 assets1 or property for deposit1 to hold1 dispose of1 or use any such money1 assets1 or property1 as belonging to the depositing digital commodity broker or digital commodity dealer or any person other than the customers of the digital commodity broker or digital commodity dealer1 respectively4 7,b7 ,use further defined ,for purposes of this section1 use of a digital commodity includes utilizing any unit of a digital asset to participate in a blockchain service defined in paragraph 7#f7 or a decentralized governance system associated with the digital commodity or the blockchain system to which the digital commodity relates in any manner other than that expressly directed by the customer from whom the unit of a digital commodity was received4 7#f7 ,participation in blockchain services 7,a7 ,use of funds ,a digital commodity broker or digital commodity dealer 7or a designee of a digital commodity broker or digital commodity dealer7 may use a unit of a digital commodity belonging to a customer to provide a blockchain service for a blockchain system to which the unit of the digital commodity relates if-- 7i7 the customer expressly permits the use1 in writing1 to the digital commodity broker or digital commodity dealer1 as the case may be2 and 7ii7 the digital commodity broker or digital commodity dealer1 as the case may be1 complies with subparagraph 7,b74 7,b7 ,limitations 7i7 ,in general ,the ,commission shall1 by rule1 establish notice and written disclosure requirements and any other limitations and rules related to a permission provided under subparagraph 7,a7 or the treatment of customer assets in the event of an insolvency1 resolution1 or liquidation proceeding1 including a description of the manner in which any digital commodity would be treated in an insolvency1 resolution1 or liquidation proceeding1 and how the treatment of digital commodities differs from the treatment of any other assets in the event of an insolvency1 resolution1 or liquidation proceeding1 that are reasonably necessary to protect customers1 including eligible contract participants1 non-eligible contract participants1 and any other class of customers4 7ii7 ,customer choice ,a digital commodity broker or digital commodity dealer may not-- 7,i7 require a customer to provide the permission referred to in subparagraph 7,a7 as a condition of doing business with the digital commodity broker or digital commodity dealer2 or 7,,ii7 penalize a customer for not providing the permission referred to in subparagraph 7,a74 7,c7 ,requirements ,the ,commission may1 by rule1 modify the requirements of paragraph 7#b7 or subsection 7g7 to facilitate the use of a unit of a digital commodity belonging to a customer to provide a blockchain service4 7,d7 ,blockchain service defined ,in this paragraph1 the term blockchain service means any activity relating to validating transactions on a blockchain system1 providing security for a blockchain system1 or other similar activity required for the ongoing operation of a blockchain system4 7#g7 ,property held in portfolio margin accounts 7,a7 ,in general ,notwithstanding paragraph 7#b71 and the rules and regulations thereunder1 and pursuant to an exemption granted by the ,commission under section #d7;c7 or pursuant to a rule or regulation-- 7i7 a digital commodity broker or digital commodity dealer registered under subsection 7b77#a7 and also registered as a futures commission merchant pursuant to section #d;f7a77#a7 may1 pursuant to a portfolio margining program approved by the ,commission1 hold digital commodity customer money1 assets1 and property in a portfolio margining account carried as a futures account or cleared swaps account2 and 7ii7 a digital commodity broker or digital commodity dealer registered under subsection 7b77#a7 and also registered as a broker or dealer pursuant to section #ae7;b77#a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho7b77#a77 may1 pursuant to a portfolio margining program approved by the ,securities and ,exchange ,commission pursuant to section #ai7;b7 of that ,act 7#ae ,u4,s4,c4 #ghs7b771 hold digital commodity customer money1 assets1 and property in a portfolio margining account carried as a securities account subject to section #ae7;c77#c7 of that ,act 7#ae ,u4,s4,c4 #gho7c77#c77 and the rules and regulations thereunder4 7,b7 ,consultation ,the ,commission shall consult with the ,securities and ,exchange ,commission to adopt rules to ensure that such transactions and accounts are subject to comparable requirements to the extent practical for similar products4 7l7 ,federal preemption 7#a7 ,in general ,the ,commission shall have exclusive jurisdiction over any digital commodity broker or digital commodity dealer registered under this section with respect to activities subject to this ,act4 7#b7 ,preservation of authority ,nothing in this subsection shall affect the ability of a ,state or local agency to investigate and bring enforcement actions regarding fraud1 deceit1 or unfair or deceptive acts or practices4 7m7 ,exemptions ,in order to promote responsible innovation and fair competition1 or protect customers1 the ,commission may 7on its own initiative or on application of the digital commodity broker or digital commodity dealer7 exempt1 unconditionally or on stated terms or conditions1 or for stated periods1 and retroactively or prospectively1 or both1 a digital commodity broker or digital commodity dealer from the requirements of this ,act1 if the ,commission determines that-- 7#a7 the exemption-- 7,a7 would be consistent with the public interest and the purposes of this ,act2 and 7,b7 will not have a material adverse effect on the ability of the ,commission to discharge regulatory duties under this ,act2 or 7#b7 the digital commodity broker or digital commodity dealer is subject to comparable1 comprehensive supervision and regulation by the appropriate government authorities in the home country of the digital commodity broker or digital commodity dealer1 respectively4 7n7 ,regulations ,the ,commission shall prescribe such rules and regulations as are appropriate for the implementation of this section4 4 #bjf4 ,registration of associated persons 7a7 ,in general ,section #dk of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #fk7 is amended by adding at the end the following3 7#g7 ,associated persons of digital commodity brokers and digital commodity dealers 7,a7 ,in general ,it shall be unlawful for any person to act as an associated person of a digital commodity broker or an associated person of a digital commodity dealer unless the person is registered with the ,commission under this ,act and such registration shall not have expired1 been suspended 7and the period of suspension has not expired71 or been revoked4 7,b7 ,duty of digital commodity brokers and dealers ,it shall be unlawful for a digital commodity broker or a digital commodity dealer to permit a person described in subparagraph 7,a7 to become or remain associated with the digital commodity broker or digital commodity dealer if the digital commodity broker or digital commodity dealer knew or should have known that the person was not so registered or that the registration had expired1 been suspended 7and the period of suspension has not expired71 or been revoked4 4 7b7 ,application ,section #dk7#d7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #fk7#d77 is amended1 in the first sentence1 by striking or of a commodity trading advisor and inserting of a commodity trading advisor1 of a digital commodity broker1 or of a digital commodity dealer4 #bjg4 ,software developer protections ,the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq47 is amended by inserting after section #du 7as added by section #bje7 the following3 #dv4 ,application to software developers 7a7 ,in general ,notwithstanding any other provision of this ,act1 except as provided in subsection 7b71 a person shall not be subject to this ,act and the regulations promulgated under this ,act based on the person directly or indirectly engaging in any of the following activities1 whether singly or in combination1 in relation to the operation of a blockchain system or in relation to a decentralized finance trading protocol3 7#a7 ,compiling network transactions or relaying1 searching1 sequencing1 validating1 or acting in a similar capacity4 7#b7 ,providing computational work1 operating a node or oracle service1 procuring1 offering1 or utilizing network bandwidth1 or providing other similar incidental services4 7#c7 ,providing a user-interface that enables a user to read and access data about a blockchain system4 7#d7 ,developing1 publishing1 or otherwise distributing a blockchain system or a decentralized finance messaging system4 7#e7 ,constituting1 administering1 or maintaining a decentralized finance messaging system or decentralized finance trading protocol1 or operating or participating in a liquidity pool with respect thereto1 for the purpose of executing a spot transaction for the purchase or sale of a digital commodity4 7#f7 ,developing1 publishing1 constituting1 administering1 maintaining1 or otherwise distributing software or systems that create or deploy hardware or software1 including wallets or other systems1 facilitating an individual user's own personal ability to keep1 safeguard1 or custody the user's digital assets or related private keys4 7b7 ,exceptions ,subsection 7a7 shall not be interpreted to apply to the anti-fraud1 anti-manipulation1 or false reporting enforcement authorities of the ,commission4 4 #bjh4 ,portfolio margining 7a7 ,in general ,section #d;d7h7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #f;d7h77 is amended in the first sentence-- 7#a7 by inserting or subsection 7f77#b7 after subsection 7a77#b72 and 7#b7 by inserting or a cleared swap after an option on such a contract4 7b7 ,commodity broker debtors ,section #bj7;c7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #bd7;c77 is amended-- 7#a7 by inserting and digital commodities after securities2 and 7#b7 by inserting or cleared swaps account after futures account4 #bji4 ,clarification on customer property ,section #bj7;a7 of the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #bd7;a77 is amended-- 7#a7 in paragraph 7#d71 by striking and at the end2 7#b7 in paragraph 7#e71 by striking the period at the end and inserting 2 and2 and 7#c7 by adding at the end the following3 7#f7 that cash1 securities1 or other property of the estate of a commodity broker1 including the trading or operating accounts of the commodity broker and commodities held in inventory by the commodity broker1 shall1 subject to any otherwise unavoidable security interest1 or otherwise unavoidable contractual offset or netting rights of creditors 7including rights set forth in a rule or bylaw of a derivatives clearing organization or a clearing agency7 in respect of such property1 be included in customer property1 but only to the extent that the property that is otherwise customer property is insufficient to satisfy the net equity claims of public customers 7as such term may be defined by the ,commission by rule or regulation7 of the commodity broker4 4 #baj4 ,resources for implementation ,the ,commodity ,exchange ,act is amended by inserting after section #h;d 7#g ,u4,s4,c4 #ab;d7 the following3 #h;e4 ,resources for implementation regarding digital commodity exchanges1 brokers1 and dealers 7a7 ,collection of fees 7#a7 ,in general ,the ,commission shall1 in accordance with this subsection1 assess and collect fees from registered digital commodity brokers1 digital commodity dealers1 digital commodity exchanges1 and qualified digital asset custodians-- 7,a7 on the filing of the initial application for registration2 and 7,b7 on an annual basis thereafter4 7#b7 ,purpose ,the fees under paragraph 7#a7 shall be used to recover the annual costs of-- 7,a7 registering digital commodity exchanges1 digital commodity brokers1 digital commodity dealers1 and qualified digital asset custodians2 7,b7 conducting oversight of digital commodity exchanges1 digital commodity brokers1 digital commodity dealers1 qualified digital asset custodians1 and digital commodity transactions2 7,c7 carrying out education and outreach under subsection 7b72 and 7,d7 carrying out such other activities as are required by the ,digital ,commodity ,intermediaries ,act and the amendments made by that ,act4 7#c7 ,determination of fee rates ,in determining fee rates under paragraph 7#a71 the ,commission shall consider-- 7,a7 the volume of business of the digital commodity exchange1 digital commodity broker1 digital commodity dealer1 or qualified digital asset custodian2 and 7,b7 the registration category of the digital commodity exchange1 digital commodity broker1 digital commodity dealer1 or qualified digital asset custodian4 7#d7 ,prohibition ,the ,commission shall not require a digital commodity exchange1 digital commodity broker1 digital commodity dealer1 or qualified digital asset custodian to collect directly from customers a transaction-based fee for each digital commodity transaction4 7#e7 ,publication 7,a7 #ast fiscal year ,not later than #cj days after the date of enactment of this section1 the ,commission shall publish the fee rates determined pursuant to this subsection for the fiscal year in which this section is enacted4 7,b7 ,subsequent fiscal years ,not later than #fj days after the date of enactment of an ,act making a regular appropriation to the ,commission for a fiscal year1 the ,commission shall publish in the ,federal ,register a notice of-- 7i7 the fee rates determined pursuant to this subsection for that fiscal year2 and 7ii7 any estimates or projections on which those fee rates are based4 7#f7 ,records and disclosure ,in carrying out this subsection1 the ,commission shall not be required to comply with section #eec of title #e1 ,united ,states ,code4 7#g7 ,no judicial review ,a fee rate prescribed under this subsection shall not be subject to judicial review4 7#h7 ,deposit of fees ,fees collected pursuant to this subsection for any fiscal year shall be deposited and credited as offsetting collections to the account providing appropriations to the ,commission4 7#i7 ,annual adjustment ,for each fiscal year1 the ,commission shall1 by order1 determine fee rates pursuant to this subsection that are reasonably likely to produce aggregate fee collections that are equal to the annual appropriation to the ,commission by ,congress for the activities described in paragraph 7#b74 7#aj7 ,lapse of appropriation ,if1 on the first day of a fiscal year1 a regular appropriation to the ,commission has not been enacted1 the ,commission shall continue to collect 7as offsetting collections7 fees pursuant to this subsection at each of the rates in effect during the preceding fiscal year4 7#aa7 ,budget requests ,the ,commissions shall itemize in each budget submitted to the ,president or the ,office of ,management and ,budget the estimated annual costs of-- 7,a7 registering digital commodity exchanges1 digital commodity brokers1 digital commodity dealers1 and qualified digital asset custodians2 7,b7 conducting oversight of digital commodity exchanges1 digital commodity brokers1 digital commodity dealers1 qualified digital asset custodians1 and digital commodity transactions2 7,c7 carrying out education and outreach under subsection 7b72 and 7,d7 carrying out such other activities as are required by the ,digital ,commodity ,intermediaries ,act and the amendments made by that ,act4 7#ab7 ,limitations 7,a7 ,in general ,fees may only be assessed and imposed pursuant to this subsection on digital commodity exchanges1 digital commodity brokers1 digital commodity dealers1 and qualified digital asset custodians regulated by the ,commission pursuant to the ,digital ,commodity ,intermediaries ,act and the amendments made by that ,act4 7,b7 ,use of fees ,fees authorized under this subsection are prohibited from funding any ,commission activity not directly related to the activities described in paragraph 7#b74 7b7 ,customer education and outreach ,the ,commission shall provide education and outreach to customers participating in digital commodity markets4 7c7 ,authorization of appropriations ,there is authorized to be appropriated to carry out the ,digital ,commodity ,intermediaries ,act and the amendments made by that ,act #aej1jjj1jjj1 to remain available until expended1 until the ,commission has established and is collecting registration fees pursuant to subsection 7a74 7d7 ,expedited hiring authority 7#a7 ,appointment authority ,the ,chairman of the ,commission may appoint individuals to a position described in paragraph 7#b7-- 7,a7 in accordance with the statutes1 rules1 and regulations governing appointments to positions in the excepted service 7as defined in section #bajc of title #e1 ,united ,states ,code72 and 7,b7 without regard to any statute1 rule1 or regulation governing appointments to positions in the competitive service 7as defined in section #bajb of such title74 7#b7 ,position described ,a position referred to in paragraph 7#a7 is a position at the ,commission that-- 7,a7 is in the competitive service 7as defined in section #bajb of title #e1 ,united ,states ,code72 and 7,b7 requires specialized knowledge of digital commodities markets1 financial and capital market formation or regulation1 financial market structures or surveillance1 data collection or analysis1 or information technology1 cybersecurity1 or system safeguards4 7#c7 ,rule of construction ,the appointment of a candidate to a position under this subsection shall not be considered to cause the position to be converted from the competitive service 7as defined in section #bajb of title #e1 ,united ,states ,code7 to the excepted service 7as defined in section #bajc of such title74 4 #baa4 ,digital commodity retail advocate ,the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq47 is amended by adding at the end the following3 #bd4 ,office of the digital commodity retail advocate 7a7 ,definitions ,in this section3 7#a7 ,chairman ,the term ,chairman means the ,chairman of the ,commission4 7#b7 ,office ,the term ,office means the ,office of the ,digital ,commodity ,retail ,advocate established by subsection 7b74 7#c7 ,retail participant ,the term retail participant means a person that-- 7,a7 is not an eligible contract participant2 7,b7 is participating in a spot or cash digital commodity market2 and 7,c7 has engaged or is engaging in a digital commodity transaction with a person registered with the ,commission4 7b7 ,office established ,there is established within the ,commission the ,office of the ,digital ,commodity ,retail ,advocate4 7c7 ,digital ,commodity ,retail ,advocate 7#a7 ,in general ,the ,digital ,commodity ,retail ,advocate shall-- 7,a7 report directly to the ,chairman2 and 7,b7 be appointed by the ,chairman from among individuals with experience in advocating for the interests of digital commodity market retail participants4 7#b7 ,compensation ,the annual rate of pay for the ,digital ,commodity ,retail ,advocate shall be equal to the highest rate of annual pay for other senior executives who report to the ,chairman4 7#c7 ,limitation on service ,an individual who serves as the ,digital ,commodity ,retail ,advocate may not be employed by the ,commission-- 7,a7 during the #b-year period ending on the date of appointment as ,digital ,commodity ,retail ,advocate2 or 7,b7 during the #e-year period beginning on the date on which the person ceases to serve as the ,digital ,commodity ,retail ,advocate4 7d7 ,functions of the digital commodity retail advocate ,the ,digital ,commodity ,retail ,advocate shall-- 7#a7 assist retail participants in resolving significant problems they may have with the ,commission or a registered futures association2 7#b7 identify areas in which retail participants would benefit from changes in the regulations of the ,commission or the rules of registered futures associations2 7#c7 identify problems that retail participants have with persons registered with the ,commission2 7#d7 analyze the potential impact on retail participants of-- 7,a7 proposed regulations of the ,commission2 and 7,b7 proposed rules of registered futures associations2 7#e7 to the extent practicable1 propose to the ,commission changes in the regulations or orders of the ,commission1 and to ,congress any legislative1 administrative1 or personnel changes1 that may be appropriate-- 7,a7 to mitigate problems identified under this subsection2 and 7,b7 to promote the interests of retail participants2 7#f7 conduct research to identify and understand issues that affect retail participants2 and 7#g7 cooperate with and provide assistance to the ,office of ,customer ,education and ,outreach to conduct initiatives and outreach for retail participants4 7e7 ,access to documents 7#a7 ,in general ,at the discretion of the ,chairman1 the ,digital ,commodity ,retail ,advocate shall have full access to the documents of the ,commission and registered futures associations as necessary to carry out the functions of the ,office4 7#b7 ,effect ,nothing in the subsection authorizes the ,digital ,commodity ,retail ,advocate1 or staff of the ,office1 to have access to1 or to release publicly or internally within the ,commission1 proprietary or sensitive market data4 7#c7 ,policies and procedures ,the ,office shall establish and make public on the website of the ,commission policies and procedures in place to safeguard the confidentiality of any documents the ,digital ,commodity ,retail ,advocate or staff of the ,office has access to4 7f7 ,annual reports 7#a7 ,report on objectives 7,a7 ,in general ,not later than ,june #cj of each year1 the ,digital ,commodity ,retail ,advocate shall submit to the ,committee on ,agriculture1 ,nutrition1 and ,forestry of the ,senate and the ,committee on ,agriculture of the ,house of ,representatives a report describing the objectives of the ,digital ,commodity ,retail ,advocate for the following fiscal year4 7,b7 ,contents ,each report required under subparagraph 7,a7 shall contain full and substantive analysis and explanation4 7#b7 ,report on activities 7,a7 ,in general ,not later than ,december #ca of each year1 the ,digital ,commodity ,retail ,advocate shall submit to the ,committee on ,agriculture1 ,nutrition1 and ,forestry of the ,senate and the ,committee on ,agriculture of the ,house of ,representatives a report describing the activities of the ,digital ,commodity ,retail ,advocate during the immediately preceding fiscal year4 7,b7 ,contents ,each report required under subparagraph 7,a7 shall include-- 7i7 appropriate statistical information and full and substantive analysis2 7ii7 information on steps that the ,digital ,commodity ,retail ,advocate has taken during the reporting period to improve-- 7,i7 services to and communication with retail participants2 and 7,,ii7 the responsiveness of the ,commission and registered futures associations to retail participant concerns2 7iii7 a summary of the most serious problems reported to the ,office or the ,commission by retail participants during the reporting period2 7iv7 an inventory of the items described in clause 7iii7 that includes-- 7,i7 identification of any action taken by the ,commission or a registered futures association and the result of that action2 7,,ii7 the period of time that each item has remained on the inventory2 and 7,,iii7 for items with respect to which no action has been taken1 the reasons for inaction1 and an identification of any official who is responsible for the action2 7v7 recommendations for such administrative and legislative actions as may be appropriate to resolve problems encountered by retail participants2 and 7vi7 any other information1 as determined appropriate by the ,digital ,commodity ,retail ,advocate4 7,c7 ,independence ,each report required under subparagraph 7,a7 shall be provided directly to the committees described in that subparagraph without any prior review or comment from the ,commission1 any ,commissioner1 any other officer or employee of the ,commission1 or the ,office of ,management and ,budget4 7,d7 ,confidentiality ,no report required under subparagraph 7,a7 may contain confidential information4 7g7 ,ombudsman 7#a7 ,appointment ,not later than #ahj days after the date on which the first ,digital ,commodity ,retail ,advocate is appointed under subsection 7c77#a77;,b71 the ,digital ,commodity ,retail ,advocate shall appoint an ,ombudsman1 who shall report directly to the ,digital ,commodity ,retail ,advocate4 7#b7 ,duties ,the ,ombudsman appointed under paragraph 7#a7 shall-- 7,a7 act as a liaison between the ,commission and any retail participant in resolving problems the retail participant may have with the ,commission or a registered futures association2 7,b7 review and make recommendations regarding policies and procedures to encourage persons to present questions to the ,digital ,commodity ,retail ,advocate regarding compliance with this ,act2 and 7,c7 establish safeguards to maintain the confidentiality of communications between the persons described in subparagraph 7,b7 and the ,ombudsman4 7#c7 ,limitation 7,a7 ,personnel ,in carrying out the duties of the ,ombudsman under paragraph 7#b71 the ,ombudsman shall utilize personnel of the ,commission1 to the extent practicable4 7,b7 ,effect ,nothing in this paragraph shall be construed as replacing1 altering1 or diminishing the activities of any ombudsman or similar office of any other agency4 7#d7 ,report 7,a7 ,report on activities ,the ,ombudsman shall submit to the ,digital ,commodity ,retail ,advocate an annual report that describes the activities and evaluates the effectiveness of the ,ombudsman during the preceding #a-year period4 7,b7 ,submission ,the ,digital ,commodity ,retail ,advocate shall include the reports required under subparagraph 7,a7 in the reports required to be submitted by the ,digital ,commodity ,retail ,advocate under subsection 7f74 4 #bab4 ,report ,not later than #ahj days after the date of enactment of this ,act1 the ,commodity ,futures ,trading ,commission 7referred to in this section as the ,commission7 shall-- 7#a7 examine the racial1 ethnic1 and gender demographics of customers participating in digital commodity markets2 7#b7 submit to the ,committee on ,agriculture1 ,nutrition1 and ,forestry of the ,senate and the ,committee on ,agriculture of the ,house of ,representatives a report-- 7,a7 describing how those demographics will inform the rules and regulations of the ,commission relating to customer protection2 7,b7 proposing ways in which the ,commission can provide outreach to historically underserved customers participating in digital commodity markets2 and 7,c7 containing policy recommendations relating to any other activities the ,commission determines to be necessary to provide appropriate protection1 outreach1 or other similar activities relating to historically underserved customers participating in digital commodity markets2 and 7#c7 in preparing the report under this subsection1 seek and consider information and input from a broad range of stakeholders1 including market participants1 customers1 and consumer advocates4 ,march #ab1 #bjbf,read the second time and placed on the calendar